June, 2016 - Lexam VG Gold Inc.

June, 2016
Cautionary Statement and Review of Presentation
Some of the statements contained in this presentation are “forward-looking statements”. Such forwardlooking statements involve known and unknown risks, uncertainties and other factors that may cause
our actual results, performance or achievements to differ materially from the anticipated results,
performance or achievements expressed or implied by such forward-looking statements. Factors that
could cause actual results to differ materially from anticipated results include risks and uncertainties
such as: ability to raise financing for further exploration and development activities; risks relating to the
estimates of reserves, deposits and production costs; extraction and development activities; the risk of
commodity price fluctuations; political regulatory and environmental risks; and other risks and
uncertainties in the reports and disclosure documents filed by Lexam VG Gold from time to time with
Canadian securities regulatory authorities. The Company disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of new information, future events
or otherwise. The complete fourth quarter report including annual information form, management’s
discussion and analysis, financial statements and the documents used for reference in this presentation
can be found on our Company’s website at www.lexamvggold.com and on SEDAR at www.sedar.com.
The technical information in this presentation has been reviewed and approved by Mr. Kenneth Guy,
P.Geo, Manager of Exploration and Qualified Person as defined by the National Instrument 43-101.
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Highlights
Lexam Projects in the Heart of
Timmins Gold Camp,
Surrounded by Major Mines
Experienced Management Chairman Rob McEwen
Owns 27% of Lexam
NI 43-101
Updated Resources and
PEA on Open Pits
Focus on Exploration,
Testing Economics on Projects,
Mergers & Acquisitions
2
Properties in Ontario
Geo-politically and socio-economically
safe mining jurisdiction
Access to quality labour & institutions
supporting mining
Stable regulatory environment
Canada’s largest gold producer
Province with highest mineral production and exploration
3
In the Heart of Timmins Gold Camp
70 M Oz Produced Over Past 100 Years
Proven mining district, with
developed infrastructure
for mining & exploration
High grade deposits, 2nd
largest gold producing
region in the western
hemisphere
Exploration potential
adjacent and below to
existing resources
4
Potential to Expand Mineralization Along Strike
Properties Surrounded by Major Mines
Lexam
mineral
properties
under-explored
Neighbouring
large gold
deposits
65 M oz Au
production
within a
10 km radius
5
Potential to Expand Resources at Depth
Neighbouring Mines with Production from Impressive Depths
55 M oz Au production within 2 km, from depths up to 2.5 km.
Current Lexam resources to depths only up to 0.5 km.
6
Building Company Value
Experienced management & industry personnel. Chairman Rob McEwen owns
27% of Lexam.
Focus on exploration, testing the economics on projects, mergers & acquisitions.
Exploration programs designed to build the resource base, with the objective of
identifying economic deposits.
Gold resources found at cost of $16/oz.
Gold Resources
Open Pit:
36 K oz Measured + 741 K oz Indicated + 358 K oz Inferred.
Underground:
64 K oz Measured + 628 K oz Indicated + 596 K oz Inferred.
PEA for open pit mining @ US$1,300/oz Au, 0.9 C$:US$ exchange rate: NPV = $33 M,
IRR = 32% after tax.
7
Gold Projects in Timmins
Davidson Tisdale
Ramp developed deposit on a 31 M oz Au Hollinger-McIntyre-Coniaurum mine trend
Fuller Deposit
Ramp developed deposit with gold zones crossing onto Paymaster, where the
mineral structure produced 1 M oz Au
Buffalo Ankerite
Buffalo Ankerite mine produced 1 M oz Au
Adjacent to 3.4 M oz Au production from Aunor-Delnite mines
Paymaster West
Porphyry gold deposit adjacent to Goldcorp’s Dome mine 17.2 M oz Au production
Significant Timmins gold production sourced from porphyry mineralization
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NI 43-101 Resource Estimates
Open Pit Resources
Measured
Indicated
Tonnage
Grade
Gold
Tonnage
Grade
Gold
(Mt)
(gpt)
(oz)
(Mt)
(gpt)
(oz)
DTM
0.45
2.44
35,500
BA
P
F
DTM
3.82
2.80
5.33
0.17
12.57
2.37
1.61
1.68
2.43
1.91
292,800
145,000
290,000
13,500
776,800
0.02
0.34
3.27
0.33
0.04
0.42
4.41
2.81
0.13
0.84
0.07
0.39
4.24
6.64
5.50
4.76
5.76
4.91
4.52
4.88
4.05
6.14
4.97
4.20
4.68
4.35
3,800
59,800
500,200
61,000
6,500
60,400
691,700
367,100
26,000
135,000
9,600
58,200
595,800
Total Measured + Indicated
Inferred
Total Inferred
Underground Resources
BA
P
F
2.74
0.84
2.70
2.31
1.61
1.30
203,400
43,000
112,000
6.28
1.79
358,400
Total Measured + Indicated (Open Pit and Underground)
Total Inferred (Open Pit and Underground)
DTM
DT S
BA
F
DTM
DTS
BA
P
F
DTM
DTS
1,468,500
954,200
Note on Resources
Projects: BA - Buffalo Ankerite, DT - Davidson Tisdale (M - Main Zone, S - S Zone), F - Fuller, P - Paymaster. The resources are net to Lexam, calculated at ownership interests: 100% for
BA, DT, F and 60% for P. Cut-Offs: Open Pit - 0.51 gpt (BA, P, F), 0.5 gpt (DTM); Underground - 2.57 Au (BA, P, F), 2.6 gpt Au (DTM), 2.0 gpt (DTS). The resource estimates are presented
in: "Technical Report and Updated Resource Estimate on the Buffalo Ankerite, Fuller, Paymaster and Davidson Tisdale Gold Deposits” dated June 21, 2013 for BA, P, F, DTM
(at US$1,600/oz Au price, US$:C$ exchange rate 1:1) and "Davidson Tisdale Gold Property, Timmins, Ontario Technical Report" dated November, 2003 for DTS.
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5 Years Increase of Lexam Resources:
Measured + Indicated Up 155%, Inferred Up 54%
10
Buffalo Ankerite - On the Mine Trend
Lexam properties and neighbouring gold production
Located on key geological structure with mineralization from surface to 5,000 ft depth.
1 million oz Au historical production at 6.51 gpt average recovered grade.
BA#5 production shaft reached 4,000 ft depth.
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Buffalo Ankerite
Advanced Exploration Project
Exploration Areas
North Zone Mineralization
- 800 m strike length
South Zone Mineralization
-1,300 m strike length
12
Buffalo Ankerite
Open Pit Resource Estimate
Zone
Tonnes
Grade
Au
(Mt)
(gpt)
(oz)
Open Pit Indicated Resource
North
1.41
2.05
93,300
South
2.41
2.57
199,500
Total
Indicated
3.82
2.37
292,800
Open Pit Inferred Resource
North
0.22
2.24
16,200
South
2.52
2.33
187,100
Total
Inferred
2.74
2.31
203,400
Numbers may not add due to rounding.
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Buffalo Ankerite
Expansion of the Underground Resource
North Zone Underground
Indicated 1.62 Mt @ 5.10 gpt = 267,200 oz Au
0.92 Mt @ 4.18 gpt = 124,100 oz Au
Inferred
South Zone Underground
Indicated
Inferred
1.65 Mt @ 4.39 gpt = 233,000 oz Au
1.89 Mt @ 4.01 gpt = 243,000 oz Au
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Paymaster Joint Venture with Goldcorp
The Best Place to Find Gold Is Next to a Gold Mine!
Paymaster West Porphyry
Resource Area
Buffalo Ankerite
Resource Area
Fuller
Resource Area
Paymaster Property
Goldcorp
Dome Mine
17.2 M oz Au
production
to date
Lexam is operator with 61% ownership interest.
Expanded Buffalo Ankerite & Fuller gold resource areas on Paymaster.
$6 M exploration program & 27 km drilling completed.
Delineated additional Paymaster West Porphyry resource area.
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Drilling at Paymaster West Expanded the Resource
Paymaster West
Project Resource
Open Pit
Indicated
4.66 M tonnes @ 1.61 gpt Au =
242,000 oz Au
Inferred
1.4 M tonnes @ 1.61 gpt Au =
72,000 oz Au
Underground
Inferred
0.22 M tonnes @ 6.14 gpt Au =
43,000 oz Au
Project resource shown on a 100% basis.
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Fuller Property
Mineralization Open to West and Below 500 m
Property resource
between surface and
500 metres depth
Recent exploration
targeted near surface
mineralization in the
quartz-feldspar
porphyry (QFP)
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Updated Fuller Resource Estimate
With Focus on the QFP Structure
Open Pit Resource
Indicated
5.33 Mt @1.68 gpt Au =
290,000 oz Au
Inferred
2.70 Mt @ 1.30 gpt Au =
112,000 oz Au
Underground Resource
Indicated
0.33 Mt @ 5.77 gpt Au =
61,000 oz Au
Inferred
0.82 Mt @ 4.97 gpt Au =
135,000 oz Au
Drill data from press releases dated Nov 29, 2011, Mar 1, Jul 11, 2012, Jan 31 2013.
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Davidson Tisdale in the Timmins Camp
On the Hollinger-McIntyre-Coniaurum Trend, North of the Destor-Porcupine Fault
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Davidson Tisdale South
Resource Estimate and Potential to Expand Mineralization
Open Pit
Resources
Tonnes
(000's)
Grade
(gpt)
Au
(oz)
Underground
Resources
Tonnes
(000's)
Grade
(gpt)
Au
(oz)
Measured
452
2.44
35,500
Measured
356
5.56
63,600
Indicated
173
2.43
13,500
Indicated
456
4.56
66,900
Inferred
457
4.61
67,800
- See page 9 for details on resources.
Exploration in the south uncovered impressive grades.
Potential to expand the Main & S-Zone mineralization areas below 300 m and to follow up on high grades.
Hole #
Depth
From
(m)
To
(m)
Width
(m)
Grade
(gpt)
03-304
38
16.1
20.5
4.4
38.55
03-310
203
163.0
166.4
3.4
341.10
03-312
162
67.3
70.8
3.5
29.86
03-315
226
161.1
165.7
4.6
197.34
04-326
317
251.9
260.4
8.5
30.05
- Drill data from “Exploration Report (2003 - 2005) and Resource Estimate Technical Report on the Tisdale Project” dated March 26, 2007.
20
Davidson Tisdale North
Exploration Potential
Predecessor exploration:
- 31.2 gpt Au
(surface grab sample)
- 26.1 gpt Au over 1.0 m
(drill hole, 39 m below surface)
Potential to follow up on 2 km strike length of
hydrothermal alteration zones in the north.
Initial exploration in the north included
property compilation & SGH geochemistry.
Additional exploration to focus on stripping (to
reveal alteration and quartz veining), geological/
structural mapping, surface sampling.
21
Metallurgical Testing for Open Pits
High Recoveries with Low Reagent Consumption,
Short Leach Times at Average Grind Sizes
Core Assay Grade
(gpt)
Gravity + Cyanide Gold Recovery
Buffalo Ankerite North Zone
4.15
94.2 %
Buffalo Ankerite South Zone
2.36
93.7 %
Paymaster
2.31
91.8 %
Fuller
1.68
90.7 %
Davidson Tisdale
1.23
98.5 %
Project
Recoveries 90.7% to 98.5%, in line with historic metallurgical results.
Reagent consumption 0.05 - 0.82 kg NaCN, 0.24 - 0.51 kg CaO/ tonne of feed.
High cyanide leach recoveries achieved in 24 hours residence.
Grind sizes P80 of 68 - 82 μm, while finer grinds would likely yield higher recoveries.
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Highlights from the Open Pit PEA
Base Case - US$1,300/oz Gold Price, 0.9 C$:US$ Exchange Rate
US$865/oz cash operating cost, after tax: C$61 M cash flow, 2.1 years payback,
C$33 M net present value, 32% internal rate of return.
Toll milling for all mineralization, contract mining for portion of the waste stripping.
Open pits optimization based on US$1,200/oz Au.
Net present value calculated at 7.5% discount rate.
Factored in: - 9.6-9.9 : 1 strip ratio;
- 95% mining extraction;
- up to 27.5% mining dilution.
C$58 M initial capital cost to construct the mine, 25% contingency priced in.
Potential for further cost reduction through additional project optimization studies.
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Directors and Management
Directors
Mr. Robert R. McEwen, Non-Executive Chairman, has been associated with the mining industry for 30 years. His career began in the investment
industry, then in 1990 he entered the mining sector. As founder, Chairman and CEO of Goldcorp Inc., Mr. McEwen took the company from a market
capitalization of $50 million to over $10 billion. He is currently the Chairman and CEO of McEwen Mining Inc., which he created by combining US Gold
Corporation and Minera Andes Inc. Mr. McEwen is the largest shareholder of McEwen Mining and of Lexam VG Gold, companies exploring for gold, silver,
copper, in Canada, USA, Mexico and Argentina. He holds a BA from the University of Western Ontario, London, Ontario, Canada and an MBA from Schulich
School of Business, York University, Toronto, Ontario, Canada. Mr. McEwen is the recipient of awards such as the PDAC Developer of the Year Award (2001),
the Ernst & Young’s Ontario Entrepreneur of the Year - Energy Award (2002), the Northern Miners’ Mining Man of the Year Award (2003), Honorary Doctor
of Laws degree from York University (2005), the Most Innovative CEO by Canadian Business Magazine Award (2006), the Order of Canada Award (2007), the
Queen Elizabeth's Diamond Jubilee Award (2013) and the Weizmann Canada's Leading Man Award (2014).
Mr. Richard W. Brissenden is CA(ON) and graduate of the Director’s Education Program of the Institute of Corporate Directors with an ICD.D designation.
Mr. Brissenden became a director of Banro Corporation in 2013 and Chairman in May 2014. He also serves as a director for McEwen Mining Inc. (since
January 2012). With over 30 years of experience, Mr. Brissenden served as a board member and executive of numerous companies in the mining and
mineral exploration sector.
Mr. John Drake is the President and co-founder of Drake Goodwin Corporation, an investment firm with interests in financial services, real estate
development and manufacturing. Mr. Drake is the Chairman of Critical Outcome Technologies Inc., a TSX Venture listed company. Mr. Drake was
appointed an Honorary Colonel of the 1st Hussars of the Royal Canadian Armored Corps. in 1999 (retired in 2011). Mr. Drake obtained his BA and LL.B
degrees from the University of Western Ontario and he is a member of the Law Society of Upper Canada.
Mr. Robin Dunbar is a director and President and CEO of Mustang Minerals Corp., which is developing a nickel deposit in Manitoba, Canada (TSXV: MUM).
Mr. Dunbar is the former Chief Financial Officer and director of Aquila Resources Inc. (TSX: AQA). Mr. Dunbar holds an M.B.A. from Dalhousie University.
Dr. Hugh C. Squair is a retired consultant, corporate director and geologist, with over 35 years of field, managerial and exploration consulting experience
in the search for precious and base metals within North America and abroad. Dr. Squair has held senior exploration positions with Falconbridge Ltd.,
Selection Trust Group, Newmont Exploration of Canada, and has worked as a consultant to Kennecott Canada and Watts Griffis & McOuat Ltd. of Toronto.
He currently serves on the boards of the following companies: Goldrea Resources Corp., Plato Gold Corp. and Rome Resources Ltd. Dr. Squair is a graduate
of the Universities of Saskatchewan with a BA in geology, and London, UK, with a PhD in mining geology.
Continued
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Directors and Management
Directors
Mr. John Tait is a consultant to the resource sector. He currently serves as Chief Executive Officer and President of Superior Copper Corporation (TSXV:
SPC) and White Pine Resources Inc., and he served as Chief Operating Officer of VG Gold Corp., as President and director of Southern Star Resources Inc.
(TSXV: SSR), which merged with Exall Resources to form Gold Eagle Mines Ltd. (TSX: GEA) and as director of Merc International Minerals Inc. (TSXV: MRK).
Gold Eagle Mines Ltd. was purchased by Goldcorp Inc. for $1.5 billion in 2008. Mr. Tait has over 20 years of experience in the mining exploration business.
Mr. Robert E. Van Tassell is a retired geologist and corporate director. Mr. Van Tassell currently sits on the board of Plato Gold Corp., a junior mineral
exploration company.
Management
Mr. Andrew Iaboni, CFO, previously served as Lexam’s Controller and currently serves as Vice President - Finance of McEwen Mining Inc. Prior to joining
Lexam and McEwen Mining in 2010, Mr. Iaboni served as Finance Manager for B2Gold Corp. from 2007 to 2009 and was employed with Ernst & Young from
2004 to 2007. Mr. Iaboni is a Chartered Accountant and holds a Bachelor of Commerce and Major in Economics from the University of Toronto.
Mr. Ken Guy, Exploration Manager, P.Geo. and a Qualified Person according to NI 43-101, has 30 years of exploration experience in Ontario, Canada. Mr.
Guy worked as an exploration manager with BP Selco, Getty Metals and Cypress Minerals prior to joining VG Gold in 2003.
Ms. Mihaela Iancu, Director, Corporate Administration, has been working in the mining industry since 2008 as a consultant. Prior to joining the
mining industry, she worked in insurance and in the academic environment. Ms. Iancu holds graduate degrees in Mathematics from the University of
Bucharest and York University.
Ms. Christina McCarthy, Director of Business Development, entered the mining industry in 2007 as an Exploration Geologist for Blackstone Ventures
Inc. She further enriched her experience in the capital markets (at TSX Group - Equicom and BayFront Capital Partners) and as a Desk Analyst and Mining
Specialist at Euro Pacific Canada. Most recently she was with Haywood Securities as a mining specialist for the Institutional Sales. Ms. McCarthy attended
Brock University enrolled in the Earth Science/Geology program in St. Catharines, Ontario and has also completed the Canadian Securities Course and
Conduct and Practices Handbook Course from the Canadian Securities Institute.
Mr. Gerry McDonald, Operations Manager, has 35 years of mining experience in Ontario, Canada. After graduating the Haileybury School of Mines he
worked with Noranda Mines Mining subsidiary, that built and operated several new mines and mills in Ontario. He was the mine manager at Kerr Addison
Mine for 3 years and worked for Westdome Gold for 11 years, where he initiated production at two mines and a mill prior to joining VG Gold in 2006.
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Stock & Contact Information
0.3
Lexam VG Gold Inc. (TSX:LEX)
0.25
0.2
0.15
Price (1)
One Year Price Range
Market Capitalization
Shares Outstanding
Shares Diluted
Average Volume (2)
Cash (3)
Ownership by Chairman Rob McEwen
0.1
$.22
$.05-.29
$ 50 M
227 M
228 M
341 K
$1.2 M
27%
(1) - Price on June 13, 2016; (2) - 3 months average
daily trading volume combined (Canada, US & EU
markets); (3) - Cash, cash equivalents & short term
investments on Mar 31, 2016.
0.05
Investor Relations Contact
Mihaela Iancu, Director, Corporate Administration, Toll Free: 1.866.441.0690, [email protected]
26