Geology | Deposits | Reserves and Resources

The LaRonde Extension will access the deeper ore at our current LaRonde operation. The project was approved for construction in May, 2006. The orebody is an annex of gold-copper and zinc-silver mineralization situated on the LaRonde property but is not accessible by the current Penna Shaft mining and milling facility.

The LaRonde Extension holds our most substantial reserve with almost 19.9 million tonnes of probable reserve grading 6.0 g/t containing approximately 3.8 million ounces of gold.

Construction and rock work are already underway. Access to the ore will be via an internal shaft or winze extending to a depth of approximately 2,900 metres. A series of ramps will enable mining to a depth of approximately 3,100 metres.

Using base case assumptions of $450 per ounce gold, $6.50 per ounce silver, $3,086 per tonne copper, $1,214 per tonne zinc, and a C$/US$ exchange rate of 1.25 the project has an internal rate of return (IRR) of 13.3%.

Expected total cash costs are $230 per ounce, while minesite operating costs are anticipated to be C$67 per tonne. Capital costs should be approximately $225 million with annual sustaining capital of $10 million to $12 million.

The mine plan contemplates a production rate of 6,000 tonnes per day at an average gold grade of approximately 6.0 grams per tonne, resulting in annual production of approximately 340,000 ounces. It is expected that this production would extend the mine life of LaRonde to 2021. The initial ramp up of production is expected in 2011 with full production rates in 2013. Annual byproduct production is expected to average 670,000 ounces of silver, 4,000 tonnes of copper and 8,600 tonnes of zinc.

Geology

The LaRonde property is located in the southern portion of the Archean Abitibi volcanic belt within the Bousquet Formation of the Blake River volcanic group. The geology is east-west trending, steeply southward dipping and generally southward facing.

The southernmost unit of the Bousquet Formation, which hosts all the significant gold and base metal mineralization on the LaRonde property, varies in thickness from 150 metres to over 500 metres. The unit is characterized by the dominance of quartz and feldspar porphyritic rhyodacite to rhyolitic flows and pyroclastic rocks.

The LaRonde and LaRonde Extension deposits occur along the eastern extremity of the east-west trending Doyon-Dumagami deformation zone. This structure is also associated with the Mouska, Doyon, Bousquet I and Bousquet II gold deposits located to the west of LaRonde. The Cadillac sedimentary group occurs to the south.

Deposits

Gold-copper and zinc-silver mineralization occurs in the form of massive and disseminated sulphide lenses that vary in size and occur throughout the southern felsic unit of the Blake River Group. Five different mineralized horizons are known to exist: Zones 6, 7, 20 North Gold, 20 North Zinc and 20 South. Zones 6 and 7 are one to two million-tonne gold bearing polymetallic massive sulphide lenses.

The 20 North Gold and Zinc zones consist of two parallel lenses of disseminated to massive sulphide up to 25 metres in thickness and up to 22.5 million tonnes in size. Gold-copper mineralization occurs in the northern lens and zinc-silver mineralization occurs immediately to the south. Deep drilling for Zone 20 North confirms the trend of increasing gold/copper grades and thickness at depth. At least two separate one to two million-ton lenses of Zone 20 South occur along the southernmost gold bearing polymetallic disseminated to massive sulphide horizon known on the property and occurs less than 30 metres north of the Cadillac Group sediments.