young-davidson mine update
TRANSCRIPT
Young-Davidson Mine Update Luc Guimond, General Manager
December 5, 2013
www.auricogold.com
FORWARD LOOKING STATEMENTS
This presentation contains forward-looking statements and forward-looking information as defined under Canadian and U.S. securities laws. All statements,
other than statements of historical fact, are forward-looking statements. The words "expect", "believe", "anticipate", "will", "intend", "estimate", "forecast",
"budget" and similar expressions identify forward-looking statements. Forward-looking statements include information as to strategy, plans or future financial or
operating performance, such as the Company’s expansion plans, project timelines, production plans, projected cash flows or capital expenditures, cost
estimates, projected exploration results, reserve and resource estimates and other statements that express management’s expectations or estimates of future
performance.
Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by management, are
inherently subject to significant uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those
projected in the forward-looking statements, including: uncertainty of production and cost estimates; fluctuations in the price of gold and foreign exchange
rates; the uncertainty of replacing depleted reserves; the risk that the Young-Davidson shaft will not perform as planned; the risk that mining operations do not
meet expectations; the risk that projects will not be developed accordingly to budgets or timelines, changes in laws in Canada, Mexico and other jurisdictions
in which the Company may carry on business; risks of obtaining necessary licenses, permits or approvals for operations or projects such as Kemess; disputes
over title to properties; the speculative nature of mineral exploration and development; risks related to aboriginal title claims; compliance risks with respect to
current and future environmental regulations; disruptions affecting operations; opportunities that may be pursued by the Company; employee relations;
availability and costs of mining inputs and labor; the ability to secure capital to execute business plans; volatility of the Company’s share price; continuation of
the dividend and dividend reinvestment plan; the effect of future financings; litigation; risk of loss due to sabotage and civil disturbances; the values of assets
and liabilities based on projected future cash flows; risks arising from derivative instruments or the absence of hedging; adequacy of internal control over
financial reporting; changes in credit rating; and the impact of inflation.
Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained
herein. Such statements are based on a number of assumptions which may prove to be incorrect, including assumptions about: business and economic
conditions; commodity prices and the price of key inputs such as labour, fuel and electricity; credit market conditions and conditions in financial markets
generally; revenue and cash flow estimates, production levels, development schedules and the associated costs; ability to procure equipment and supplies
and on a timely basis; the timing of the receipt of permits and other approvals for projects and operations; the ability to attract and retain skilled employees and
contractors for the operations; the accuracy of reserve and resource estimates; the impact of changes in currency exchange rates on costs and results;
interest rates; taxation; and ongoing relations with employees and business partners. 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, except as required by applicable law.
Cautionary Note to U.S. Investors Concerning Measured, Indicated and Inferred Resources
This presentation uses the terms "measured," "indicated" and "inferred” resources. We advise investors that while those terms are recognized and required by
Canadian regulations, the United States Securities and Exchange Commission does not recognize them. “Inferred” resources” have a great amount of
uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred resource will ever be
upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies.
United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral
reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally
mineable.
2
Overview
• Historic production from underground gold mines in
Timmins and Kirkland Lake (~108 M Oz.)
• Five mines with greater than 5 million ounces
production, Young-Davidson is likely to be the sixth
• Low cost producer and strong
production growth profile
• Long mine life: Opportunity to
expand as reserves increase
• Located in a stable jurisdiction,
close to major centres
• First gold pour on April 30th, 2012
• Commercial production declared
September 1st, 2012
• Underground production
commenced Oct/12;Declared
commercial production Oct. 31/13
• Solid safety record
(1) Refer to endnote #1. 3
0
5
10
15
20
Holli
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ore
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19
18
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Wrig
ht
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ck H
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avid
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02-1
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Hoyle
Pon
d
Ou
nc
es
(M
illi
on
s)
Historic Production from U/G Mines of Timmins & Kirkland Lake(1)
Historical Production YD P&P YD M&I YD Inferred
Active
Rich Tradition – Mine History
• Site of two former producers
• 20+ years in operation
• +1,200 tpd average production rate
• Early pioneers of bulk mining
• +1 million tonne stopes underground
• Mined ~9 million tonnes and produced 970,000
ounces
• Average realized grade of 3.37 g/tonne
• Profitable operations at realized grades
• Supported dividend payments
Period Mine Tonnes Grade (g/t) Produced (Oz)
1934 to 1957 YD 5,653,000 3.21 585,000
1934 to 1954 MCM 3,205,000 3.66 378,000
1981 to 1982 MCM 96,400 2.36 7,300
Total 8,954,400 3.37 970,300
Young-Davidson Mine (YD)
Matachewan Consolidated Mine (MCM)
4
Responsible Mining
Fostering positive relationships with all stakeholders
• Strong First Nations support
• Partnerships with local communities
• Hiring and training locally
• 96% of mine workforce from local regions
• Supporting local suppliers
• 47% of mine spending on local suppliers
5
Underground Mine Plan
Transverse long hole stoping
• For wider zones (12-40m)
• 30m sub levels
• Longitudinal retreat
• For areas < 12m widths
• Pastefill
• Mining recovery ~ 92%
• Dilution ~10%
• Underground reserve grade
2.82 g/t
YD West
Zone
Highly Productive Mining Methods
6 3.8M reserve ounces with exploration upside
YD Historic
Mine Workings
Open Pit
Ramp Portal
10350L
MCM Shaft
9890L
9590L
9400L
9200L
8900L
MCM Historic
Mine Workings
NG Shaft
Open Pit Overview
• 315m wide x 800m long and 140m deep
• Life of Mine production: 2.25 years
• 7.5Mt of ore @ 1.36 g/t Au
• Mill Feed 4.2Mt @ 1.78 g/t
• Low grade stockpile 3.3Mt @ 0.82 g/t
• Strip Ratio 2.5:1
• 8m benches
• Cat 777 Trucks
• 992 Loaders 7
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Target Actual
Underground Mine Productivity (tpd)
Underground Mining Rates
• Commercial underground production declared October 31, 2013
• Target of 2,000tpd by end of 2013
• Currently mining in the Upper Boundary Zone (“UBZ”)
• 60,000 to 80,000 tonne stopes
• Mining 30,000 to 40,000 tonne panels
• Overall average ore thickness (current reserves) is 20 metres
• Highly productive bulk mining methodologies
• Highly mechanized with low manning requirements
• Consistently exceeding 1,000 tpd
• Four stopes mined to date
• Ramp up progressing well
8
Commercial
Production
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2012A 2013E 2014E 2015E 2016E 2017E
Underground Mine Ramp-up (tpd) (Year-End Productivity)
Process Plant Performance YTD
Crusher
9
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Mill Tonnes Processed (tonnes per day) Target Actual
Shaft System Productivities
10
• Supports increased
underground mining rates
• Improved productivity vs.
ramp haulage
• Optimizes cycle time
• Enhanced cost efficiencies
• Reduces mobile equipment
requirements
• Improves ventilation
• ⅔ of 2014 mine plan is
currently accessed
• Capacity of 8,000tpd
Upper mine represents 8 years of production
Northgate Production Shaft Work
• 3rd leg (610m)
• Planned end of 2016
• 1st leg reaming completed (440m)
• Ground support completed
• 2nd leg reaming completed (890m)
LEGEND
Raise Bore Leg #1
Raise Bore Leg #2
Raise Bore Leg #3
11
• Current location of shaft
bottom 9533 L
• Shaft sinking activities will
resume in September
• Continue hoisting waste
through MCM shaft
Accessing mine via shaft system
Reaming of NG shaft
Solid Production Growth
Stable and Growing Production Profile(3)
• Solid production growth quarter over quarter
• Cash costs in-line with target levels
(3) Refer to endnote #3.
12
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13E
Go
ld O
un
ces P
rod
uced
Endnotes
1. Data provided by the Timmins Resident Geologist Program Ontario Geological Survey for the Ministry of Northern Development & Mines (2006).
2. Reserves and resources for Young-Davidson and El Chanate mines, Kemess Underground Project, and Orion represent gold grade as per technical reports and
Company disclosure. For more information regarding AuRico Gold’s Mineral Reserves and Resources as at December 31, 2012 and the Kemess Feasibility
Study, please refer to the press release dated March 25, 2013 titled AuRico Reports 2012 Reserve & Resource Update and Kemess Feasibility Study Results,
available on the Company website at www.auricogold.com. Measured and indicated resources excludes inferred resources.
3. Production figures include gold ounces only. Production at the Young-Davidson mine includes pre-production ounces, which include ounces produced prior to the
declaration of commercial production on September 1, 2012, as well as all ounces produced from the underground mine.
4. All-in sustaining costs are defined as cash costs, sustaining capital, corporate general and administrative expense, reclamation, care and maintenance expense,
and exploration expenditures. Prior to commissioning the underground mine at Young-Davidson, all-in cash costs are calculated on ounces produced from the
open pit only. All underground costs are capitalized, and any revenue related to underground ounces sold is credited against capital expenditures.
13
Appendix
Crusher Station 9530 L
Soledad Property – Kern County, California
15
Conveyor Level 9500 L
Soledad Property – Kern County, California
16
Reserves and Resources(2)
Total Proven and Probable Reserves
Tonnes
(000's)
Gold
(g/t)
Gold Oz.
(000's)
Young-Davidson - Surface 6,425 1.31 271
Young-Davidson - Underground 39,037 2.82 3,534
Total Young-Davidson 45,462 2.60 3,804
Total Measured and Indicated Resources
Tonnes
(000's)
Gold
(g/t)
Gold Oz.
(000's)
Young-Davidson - Surface 291 1.70 16
Young-Davidson - Underground 9,531 2.74 839
Total Young-Davidson 9,821 2.71 855
Inferred Resources
Tonnes
(000's)
Gold
(g/t)
Gold Oz.
(000's)
Young-Davidson - Surface 31 0.99 1
Young-Davidson - Underground 13,983 2.80 1,259
Total Young-Davidson 14,014 2.80 1,260
(2) Refer to endnote 2. 17
Notes to Reserves and Resources
Notes:
• Mineral Reserves and Resources have been stated as at December 31, 2012.
• Mineral Resources are in addition to Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability when calculated using Mineral
Reserve assumptions. Reserves have been reported in accordance with NI 43-101, as required by Canadian securities regulatory authorities. In addition, while the terms “Measured”,
“Indicated and “Inferred” Mineral Resources are required pursuant to NI 43-101, the SEC does not recognize such terms. Canadian standards differ significantly from the requirements of
the SEC, and mineral resource information contained herein is not comparable to similar information regarding mineral reserves disclosed in accordance with the requirements of the SEC.
Investors should understand that “Inferred” Mineral Resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. In
addition, investors are cautioned not to assume that any part or all of AuRico’s Mineral Resources constitute or will be converted into Reserves.
• Following the completion of a joint venture agreement, Minera Frisco has a 50% interest in the Orion Project.
• Mineral resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding.
The following metal prices were used for the calculation of Reserves and Resources:
Reserves Resources
USD Au $/oz Ag $/oz Cu $/lb Au $/oz Ag $/oz Cu $/lb
El Chanate $1,400 - - $1,600 - -
Young-Davidson $1,400 - - $1,600 - -
Kemess Underground $1,300 $23.00 $3.00 $13.00 NSR
Orion - - - $850 $13.00 -
Reserves and Resources were prepared under the supervision of the following Qualified Persons:
Resources Reserves
El Chanate Jeffrey Volk, CPG, FAusIMM, Director Reserves
and Resources, AuRico Gold Inc. Chris Sharpe, P.Eng, Manager Mining, AuRico Gold Inc.
Young-Davidson - Open Pit Jeffrey Volk, CPG, FAusIMM, Director Reserves
and Resources, AuRico Gold Inc. Chris Sharpe, P.Eng, Manager Mining, AuRico Gold Inc.
Young-Davidson - Underground Jeffrey Volk, CPG, FAusIMM, Director Reserves
and Resources, AuRico Gold Inc.
Chris Bostwick, FAusIMM, SVP Technical Services,
AuRico Gold Inc.
Kemess Underground Jeffrey Volk, CPG, FAusIMM, Director Reserves
and Resources, AuRico Gold Inc.
Chris Bostwick, FAusIMM, SVP Technical Services,
AuRico Gold Inc.
Orion Jeffrey Volk, CPG, FAusIMM, Director Reserves
and Resources, AuRico Gold Inc.
18
All-in Sustaining Cash Cost Allocation
Cash Costs
Sustaining
Exploration
Corporate G&A
2013 All-in Sustaining Cash Costs $1,100-$1,200 per ounce(4)
Labour 57%
Power 6%
Diesel 9%
Consumables 19%
Materials/Mtc 9%
Cost Allocation
(Includes contract
labour)
All-in Sustaining Cash Costs
• Provides increased transparency
• More representative of actual cost of production
• Removes influence of accounting treatments
• Can be reconciled to FCF
19 (4) Refer to endnote #4.