The objective of the exploration and delineation drilling programs at the Island Gold Mine is to unlock the geological potential of this cornerstone asset. To date, drilling results continue to demonstrate the significant near-term potential to grow our near-mine reserve inventory and identify new resource blocks located outside the Expansion Case PEA area at depth, below the 1,000 metre level and laterally along strike, primarily to the east. In the area approximately 800 metres east of the main deposit, recent exploration drilling has identified a new mineralized zone in the down plunge extension of a high-grade trend identified in 2016. This new area is located only 500 metres east and below the new resource blocks, suggesting that the structure could continue at depth. (See press release dated March 30, 2017)

2017 DRILLING PROGRAM – ISLAND GOLD MINE

Early results from the delineation drilling in the Expansion Case PEA area indicate the significant potential to further expand reserves at higher than current average grades. In 2017, work will continue on advancing the systematic drilling program, with an overall focus on positively impacting the near-term mine life and identifying the next million ounces of resources outside the Expansion Case PEA area.

The 2016 delineation drilling program contributed to a 34% increase in reserves at an 11% higher grade, while the exploration program delivered more than 450,000 ounces of new inferred resources at a cost of less than $35 per ounce discovered. As of December 31, 2016, the Island Gold Mine increased its reserve base to 752,200 ounces of gold at a higher grade of 9.17 g/t, while inferred resources increased to 995,700 ounces of gold at a higher grade of 10.18 g/t.

The 2017 drilling program currently underway continues to build on positive results achieved in 2016 and is focused on three key priorities: 1) to expand near-mine resources outside the Expansion Case PEA area, both laterally and at depth; 2) to further expand the reserve base, primarily within the Expansion Case PEA area; and 3) continuing to test high priority regional gold targets across the prospective Island Gold Mine property.

Eastern Lateral Exploration and Infill Drilling Program

The 2016 drilling program successfully added two new inferred resource blocks in the eastern lateral extension, approximately 300 metres east of the Expansion Case PEA area, between the 340 and the 750 metre levels. The largest inferred resource block contains approximately 290,000 tonnes at a grade of 10.35 g/t of gold (approximately 95,000 ounces of gold). These two new blocks are relatively shallow and easily accessible from the existing mine infrastructure. As a result, the 2017 exploration program is following up on the eastern lateral extension area, particularly on a high-grade intersection (Hole GD-630-01) of 25.27 g/t gold over 3.85 metres located approximately 500 metres east of the new resource blocks that was identified in 2016, and continues to target the extension and infill of the new resource blocks.

Recent drilling in the eastern lateral extension has been focused in the down plunge extension of Hole GD-630-01. Highlights include:

  • Hole GD-640-05 intersected 20.57 g/t (26.55 g/t uncut) of gold over a core length of 11.3 metres, at a vertical depth of approximately 1,000 metres;
  • Hole GD-640-04, located approximately 150 metres above hole GD-640-05, intersected 7.38 g/t gold over 3.27 metres.

One directional drill rig has been redeployed to this area to follow-up on the exploration success in this area. The initial 2017 directional drill hole (GD-640-05-1) was completed between holes GD-640-04 and GD-640-05 noted above, and intersected two high-grade intervals at the same elevation, but located 40 to 50 metres north of GD-640-05. The first interval intersected 16.1 g/t gold (28.13 g/t uncut) over a core length of 8.33 metres and the second intersected 10.16 g/t gold (17.32 g/t uncut) over a core length of 5.74 metres. Additional drilling will be required to better understand the geometry and true width of this new area of high-grade mineralization. This new discovery represents significant upside to the potential extension of the eastern lateral corridor. A second directional drill rig will be added to accelerate drilling in this area.

Exploration and infill drilling has continued from the 340 metre level exploration drift that targets a potential extension and infill of the current resource blocks that were identified in 2016. One drill rig is working in the area and another drill rig will be added on the 620 metre level once the 300 metre extension of the exploration drift is completed in the second half of the year.

Recent highlights from Eastern Lateral exploration and infill drilling from the 340 metre level exploration drift (subsequent to the October 12, 2016 exploration press release), include (Table 2):

  • Hole 340-576-02: 8.50 g/t gold over 2.00 metres;
  • Hole 340-588-08: 14.96 g/t gold over 2.00 metres;
  • Hole 340-588-11: 10.10 g/t gold over 3.00 metres;
  • Hole 340-588-12: 10.24 g/t gold over 3.00 metres;
  • Hole 340-588-13: 33.60 g/t gold over 2.00 metres;
  • Hole 340-588-14: 10.60 g/t gold over 2.00 metres;
  • Hole 340-588-15: 11.44 g/t gold over 4.36 metres.

A total of 8,232 metres (33 holes) of exploration and infill drilling of the planned 37,000 metres have been completed to date in the eastern lateral area.

Deep Directional Exploration Drilling Program

The successful 2016 deep drilling program identified a new large inferred resource block of 760,000 tonnes at a grade of 9.53 g/t gold (approximately 230,000 ounces) in the eastern down plunge extension, located between the 1,050 and the 1,300 metre levels.

The deep directional exploration drilling program continues in 2017 and targets the expansion of the new resource block. A total of 16,000 metres of deep directional drilling and 20,000 metres of underground drilling are planned in 2017. The underground drilling will be primarily completed from the 860 metre level exploration drift (400 metre length) that is scheduled to be completed in 2017.

Results to date continue to be encouraging with Hole MH1-10 intersecting 24.5 g/t gold over 3.76 metres. In the eastern portion of this area, Hole MH8 intersected 4.6 g/t gold over 2.24 metres, demonstrating that the mineralization remains open to the east.

In the western area, mineralized zones were intersected and additional drilling is required to better understand the structural geology at depth, however these new zones increase the overall potential of the down plunge extension and provide new high quality targets for follow up drilling.

A total of 5,052 metres (10 holes) have been drilled to date and three surface directional drill rigs are presently working in this area.

Other highlights from the deep directional exploration and infill drilling include (Table 3):

  • Hole MH2A-7: 11.36 g/t gold over a core length of 10.40 metres (Zone X);
  • Hole MH2A-8: 10.37 g/t gold over 9.17 metres;
  • Hole MH2A-10: 6.16 g/t gold over 11.58 metres;
  • Hole MH5-1A: 9.27 g/t gold over 5.93 metres.

EXPANSION CASE PEA DELINEATION DRILLING PROGRAM

For 2017, a total of 30,000 metres of delineation drilling is planned within the Expansion Case PEA area, primarily in the fourth mining horizon located between the 860 and 1,000 metre levels. Currently, two drill rigs are working in the area and a total of 6,866 metres (40 holes) have been completed to date.

Drilling continues to demonstrate the potential for additional reserve growth, including ounces and grade, primarily through the conversion of the high-grade inferred resources located in the fourth horizon. Results to date also demonstrate the potential to identify additional resources as high-grade mineralization continues to be intersected between the inferred resource blocks.

Recent drilling highlights from delineation and infill drilling completed within the Expansion Case PEA area, which have not been included in the December 2016 Resource and Reserve update include (Table 1):

  • Hole 740-465-08: 43.05 g/t gold over 5.13 metres;
  • Hole 740-465-16: 96.47 g/t gold over 5.08 metres;
  • Hole 740-465-15: 23.29 g/t gold over 3.51 metres;
  • Hole 740-465-20: 24.56 g/t gold over 3.85 metres;
  • Hole 740-483-21: 34.13 g/t gold over 3.53 metres;
  • Hole 820-520-08: 53.64 g/t gold over 6.53 metres;
  • Hole 820-520-13: 30.20 g/t gold over 3.62 metres.

Phase 2 Regional Drilling Program

The Phase 2 regional drilling program is designed to continue to evaluate the potential extension of the mineralization below the Kremzar mine as well as other previously identified high-priority gold targets located elsewhere on the highly prospective 77 km2 Island Gold property. The Phase 2 regional drilling program is expected to begin later in 2017.