Coffee Gold Project — 2016 Feasibility Study Technical Report

This report presents the feasibility study for the Coffee Gold Project, detailing the proposed open pit mining and heap leach processing operation in west-central Yukon, Canada.

Report context

The Coffee Gold Project is located in west-central Yukon, within the Whitehorse Mining District, Canada, 130 kilometres south of Dawson. The project comprises 3,021 contiguous claims covering an aggregate area of approximately 60,502 hectares. The effective date of this feasibility study technical report is January 6, 2016. The mineral resource estimate was updated sequentially following completion of drilling on the various deposits, with effective dates of March 15, 2015 for Latte, Double Double and Kona, and September 22, 2015 for Supremo. The mineral reserve estimate is based on the mineral resource estimate completed by SIM Geological Inc.

Processing route

Metallurgical Testing Program

Metallurgical testing for the Coffee deposits began in 2011 and continued through 2015. Initial testing was conducted by Inspectorate Exploration & Mining Services Ltd. of Richmond, British Columbia. Since 2013, almost all metallurgical testing for flowsheet development has been performed by Kappes Cassiday and Associates (KCA) of Reno, Nevada. In 2015, comminution test work was completed by ALS Metallurgy of Kamloops, British Columbia.

Ore samples for metallurgical testing have been taken from both bulk surface samples and drill core composites. Testing included column leaching, bottle roll leaching, flotation, column percolation and drain down, multi-element head assay analyses, column leach head and tail assay screen analyses, ball mill work indices, crushing impact, and abrasion indices. In addition to fire assays for gold and silver, analyses for carbon, sulphur, mercury and copper, semi-quantitative analyses for a series of individual elements and whole rock constituents were conducted. No problematic elements were encountered during the head analyses. Silver concentrations are low and any possible silver production will not be economically significant.

The drill core sample collection and compositing was developed to construct samples from multiple drill holes and intervals to fully represent the known areas of the different deposits and facies.

Comminution Testwork Results

Four Bond low impact crusher tests were conducted on the Kona, Double Double, Supremo and Latte composites. The highest value achieved was 11.5 kWh/t from the Latte composite. This is considered soft with respect to impact breakage. Bond abrasion index (AI) tests were conducted on eight samples from all mine areas and the values ranged from 0.029 to 0.097. Samples with an AI of 0.1 or less may be considered mildly abrasive. Bond Rod Mill and Ball Mill Work indices were 12.73 and 15.06 kWh/t respectively for a Latte sulphide composite sample.

Major Test Program Conclusions

Major conclusions from the test program include: Coffee ores generally leach very rapidly with low reagent consumption; ore agglomeration is not required; a trade-off study to evaluate the incremental economics of crushing to a size of 80% passing a 150 mm screen size (P80 of 150 mm) as compared to a P80 of 50 mm determined the P80 of 50 mm to be the optimal option; and cyanide soluble assays from over 14,000 samples confirmed that cyanide soluble recovery is a reliable method to map gold recovery in all known ore zones of the Coffee Gold Project deposit.

To project actual plant operating conditions, laboratory test work gold recoveries were reduced 3% and sodium cyanide consumptions were factored by 25%. However, for the Kona Middle and Lower Transition samples (which represent less than 0.05% of the mineable reserve and where there were not enough drill intervals to assemble a composite), recoveries from the cyanide soluble test work were discounted by 11% and 12% respectively.

The leach profile shows an initial rapid recovery of gold, followed by a slower leaching period to achieve ultimate gold extraction. From KCA test results, a standardized leach profile for all Project ore types were developed based on the solution to solids ratio. The actual period of leaching was adjusted to fit the solution to solids ratio and will be considerably longer than indicated by laboratory columns.

Proposed Crushing and Ore Handling

The process flowsheet includes a two-stage crushing plant followed by a heap leach operation. Run-of-mine ore with an approximate top size of 750 mm will be trucked from the pits and normally dumped directly into the primary jaw crusher at a rate of about 18,000 t/d. A ROM stockpile area with a capacity of approximately 1.5 Mt will allow the stockpiling of ore when the crusher is not running, particularly during the winter months of January through March. The jaw and secondary cone crusher will discharge feed onto the secondary crusher screen. The oversize will return to the secondary cone crusher and the undersize is conveyed to the crushed-ore stockpile. The final target product size is a P80 of 50 mm. Lime will be added to the stockpile feed conveyor for pH control on the heap leach.

Crushed ore will be reclaimed by a front-end loader from a 3,000 t crushed ore stockpile and a fleet of haul trucks will transport the material to the heap leach facility. The crushing plant and haul trucks will operate 275 days per year with no heap leach loading during the coldest period of the year.

Proposed Heap Leach Facility

The heap leach facility consists of a conventional, multi-lift, free-draining ridge-top leach pad, ponds, access roads, and leachate solution distribution and collection piping. Ore will be stacked with trucks on a lined leach pad in nominal 10 m thick lifts. Barren solution will be irrigated onto the heap using drip irrigation. Pregnant (gold-bearing) solution will be collected at the base of the heap leach pad by impermeable membranes and piping. The pregnant solution will flow to the process plant by gravity for gold recovery. The heap is stacked to the ultimate design height of about 80 m (vertically over the leach pad).

The leach pad will be constructed on a graded area along the ridgeline to the west of the process plant and pits. The leach pad will be constructed in stages, with each stage large enough to provide ore capacity for one and a half to three years of operation. The pad will be lined with two liners: a geosynthetic clay liner (GCL) at the base directly overlain by an impermeable collection geomembrane. A network of drainage pipes within a 500-mm thick layer of permeable gravel at the base of the pad will collect and direct the pregnant solution into trunk lines on each flank of the pad and transport it by gravity to the process plant. A series of horizontal trenches or wick drains will be installed beneath the liner system to detect leakage.

Design criteria for the heap leach facility include: nominal design capacity of 47 Mt with expansion capacity to at least 61 Mt; the heap leach pad construction will be phased to optimize capital expenditure, with Stage 1 having a capacity of 7.2 Mt constructed in Year -1, and Stage 2 and beyond having incremental capacities of 8 to 20 Mt each (1.5 to 4 years of operating capacity). The heap leach pad is designed with a base composite liner system and graded to promote free-draining of the pregnant solution to the flanks of the leach pad and then via a pipeline to the plant.

Mitigations to the extreme climate are incorporated to ensure that the heap leach pad does not freeze, including: loading a minimum of 3.5 Mt of ore to the pad, with 30 m of ore depth, in Year -1 in order to maintain thermal integrity; no ore crushing or heap stacking during January through March of each year; barren solution heating November through March of each year with the heating plant designed for 50% surplus capacity; temporary geomembrane covers (thermal covers) will be used beginning in Year 3 to maintain ore and solution temperatures and reduce or eliminate the need for barren solution heating during winter, with the thermal covers also minimizing precipitation infiltration during spring and summer and maximizing runoff for storage or discharge depending on operational water needs; and drip lines will be buried to a depth of at least 1 m before winter, and after Year -1, a backup irrigation area equal to 100% of the primary area will be provided in the event the primary lines freeze.

Solution ponds will not be used in the winter except in upset conditions. Pregnant, barren and wash water will be stored in tanks at the plant (rather than ponds), processed, heated and recirculated back to the heap during the winter period. The heap water balance is designed to minimize make-up water demand from external sources and avoid the need to treat surplus water until near the end of the mine life.

Proposed Processing Plant

The pregnant solution from the heap leach pad will flow by gravity from the heap at a nominal rate of 455 m³/h (design 600 m³/h) by pipe to the pregnant solution tank located in the process plant building. The solution will then be pumped to the carbon adsorption circuit. The carbon adsorption circuit consists of a series of six cascading carbon columns. The barren solution that will discharge from the final carbon column is pumped to the barren solution tank. Cyanide solution, caustic solution and anti-scalant are added to the barren solution as needed. During the colder months, November to the end of March, a boiler will be used to heat the barren solution before it is pumped back to the leach pad.

The loaded carbon from the first carbon column is advanced to the desorption circuit. The loaded carbon, 5 t/d, will be acid washed and gold recovered from the carbon in the strip vessel. The pregnant solution from the strip vessel will flow to the electrowinning circuit. At the conclusion of the strip cycle, the stripped carbon will be thermally regenerated in the 5 t carbon reactivation kiln.

Gold will be plated onto knitted-mesh steel wool cathodes in the electrowinning cells. The gold-bearing sludge and steel wool will be dried in an oven, mixed with fluxes and then smelted to produce gold doré and slag. The doré will be stored in a vault while waiting for transport off site to a refinery for further purification. Slag is processed to remove prills for re-melting in the furnace.

A laboratory facility will be equipped to perform sample preparation and assays by atomic absorption, fire assay, and cyanide (CN) soluble analyses. A metallurgical test work area for process optimization is also included.

Proposed Gold Production Model

The gold production model was developed from a combination of metallurgical testing data, the mine production schedule, the heap leach facility construction sequence (or stacking plan), and the leaching plan for the application of barren solution to the heaps. The gold production model was developed on a quarterly basis for Years -1 through Year 3. At the end of each year when the heaps are no longer loaded with ore there will be an in-process inventory of recoverable gold remaining from two general areas: the recoverable gold in the ore in the heaps that has not been leached to completion and the recoverable gold contained in solution inventories, carbon, and the electrowinning/refining area that has not yet been processed into doré.

At the end of Year 3 the recoverable gold added to the heap and the gold actually produced reach equilibrium and the in-process inventory has stabilized. From Year 4 through to Year 8, the gold produced is the recoverable gold added to the heap with the inventory of gold to be recovered remaining constant. In the third quarter of Year 9 the mined ore and ROM stockpile are depleted. At that time the recovery of the in-process inventory will begin and will continue through Year 10 to completion. It is assumed that 50% of the in-process inventory will be recovered in Year 9 and the remainder in Year 10.

Summary of Gold Recovery by Ore Type

A summary of the distribution of ore types and gold recovery from the proposed mining plan shows that oxide ore represents 82.2% of ore tonnes (38,105 kt), 80.3% of contained gold (1,731 koz) and 84.3% of recoverable gold (1,569 koz). Upper Transition ore represents 11.5% of ore tonnes, 12.5% of contained gold and 11.5% of recoverable gold. Middle Transition ore represents 4.7% of ore tonnes, 5.2% of contained gold and 3.5% of recoverable gold. Lower Transition ore represents 1.6% of ore tonnes, 2.1% of contained gold and 0.6% of recoverable gold.

Key reported parameters

Technical qualifications

The qualified persons preparing this report are specialists in the fields of geology, exploration, mineral resource and mineral reserve estimation and classification, geotechnical, environmental, permitting, metallurgical testing, mineral processing, processing design, capital and operating cost estimation, and mineral economics. None of the qualified persons or any associates employed in the preparation of this report has any beneficial interest in Kaminak and neither are they insiders, associates, or affiliates. The results of this report are not dependent upon any prior agreements concerning the conclusions to be reached, nor are there any undisclosed understandings concerning any future business dealings between Kaminak and the qualified persons. The qualified persons are being paid a fee for their work in accordance with normal professional consulting practice.

The qualified persons opinions contained herein are based on information provided by Kaminak and others throughout the course of the study. The qualified persons have taken reasonable measures to confirm information provided by others and take responsibility for the information.

Non-qualified person specialists relied upon for specific advice include: Fred Lightner, Kaminak Gold Corp. provided oversight and review of metallurgical testwork, crusing, heap leach facility, the ADR process and gold recovery model; Anthony Crews, P.E. designed the heap leach facility; David Flather, Lorax Environmental Services Ltd. advised on geochemistry and water balance; Jeremy Araki, Onsite Engineering Ltd.; Kevin Jones, Tetra Tech EBA (Tetra) for advice relating to permafrost; and Ernst and Young advised on the tax model.

The gold price and exchange rate used in this study are only estimates based on recent historical performance and there is absolutely no guarantee that they will be realized if the Project is taken into production. The gold price is based on many complex factors and there is no reliable method of predicting long term gold price.

The depth extents of the generated pits were compared to the proportion of resources located within incremental depths of 50 m below surface. The results show that essentially all Indicated Resources and the majority of the Inferred Resources occur at depths where it is considered reasonable that present and future economic conditions would support open pit extraction. As a result, the mineral resources for the Coffee Gold Project are not constrained within a pit shell or a maximum depth below surface because, in the author's opinion, any or all of the Coffee Gold Project resource shows reasonable prospects for eventual economic extraction.

There are no known factors related to environmental, permitting, legal, title, taxation, socio-economic, marketing, or political issues which could materially affect the extraction of the mineral resource.

The most significant potential risks associated with the Project are metallurgical recovery, climatic influences, uncontrolled dilution, operating and capital cost escalation, permitting and environmental compliance, unforeseen schedule delays, changes in regulatory requirements, ability to raise financing and metal price. These risks are common to most mining projects, many of which can be mitigated with adequate engineering, planning and pro-active management.

Source: Coffee Gold Project , 2016 Feasibility Study Technical Report, effective date January 6, 2016, relevant sections including 1.5 Mineral Processing and Metallurgical Testing, 1.6 Mineral Resource Estimate, 1.7 Mineral Reserve Estimate, 1.8 Mining, 1.9 Recovery Methods, 1.10 Project Infrastructure, 1.15 Economic Analysis, 1.16 Conclusions, 2.1 Basis of Feasibility Study, 2.2 Scope of Work, 2.3 Qualified Person Responsibilities and Site Inspections, 3 Reliance on Other Experts, and 4 Property Description and Location.