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March 06, 2014 --- Vol. 08, No. 10March 2014

British Columbia

MINE SHUTDOWN – Imperial Metals Corp. Mar. 5 reported that the mill at the Huckleberry copper mine in British Columbia may be out of operation for as long as four months. On Feb. 26, Huckleberry Mines Ltd. – an operating company owned 50 percent by Imperial and 50 percent by a consortium of Japanese firms comprised of Mitsubishi Materials Corporation, Dowa Mining Co. Ltd. and Furukawa Co. – became aware of a physical failure at SAG mill at the Huckleberry Mine. An investigation discovered that there was a broken tooth in the bull gear. Huckleberry is currently reviewing all options in order to determine the method in which to safely and efficiently repair the damage. It is currently anticipated that the mill may not be down for up to four months, depending on the availability of the necessary replacement parts to repair the gear. Huckleberry Mines expects it will be able to bring forward a number of maintenance activities during the shutdown, including an upgrade to the mill flotation cells. Huckleberry Mines has property insurance that covers mill repair costs such as equipment purchases, installation, commissioning and testing. The operating company also has business interruption insurance that covers certain standing charges but does not cover lost profits. Huckleberry Mines will make a claim but Imperial cautions that there is no guarantee the insurance provider will pay such a claim. Imperial’s 50 percent share of Huckleberry’s production during the 12-month period ended Sept. 30, 2013 was approximately 20 million pounds of copper and approximately 116,000 ounces of silver. The company’s portion of the net income of Huckleberry for the year ended Sept. 30, 2013 was C$5.6 million. Given Huckleberry Mine’s cash and short term investments, excluding reclamation bonds, of C$44 million as of Feb. 28, it is not expected that Imperial or Huckleberry’s other investors will need to contribute any cash as a result of the shutdown.

GOLD – Banks Island Gold Ltd. Mar. 5 said British Columbia Ministry of Energy and Mines has issued a mines act permit that allows the company to advance toward commercial production at its Yellow Giant gold project, situated on Banks Island, British Columbia. Mine Permit M-241 allows the construction of a 200-ton-per-day grinding and flotation plant, an underground mine at the Tel zone, and associated facilities including rock stockpiles and other infrastructure. Banks Island Gold said it anticipates approval of its British Columbia Mining Lease and Environmental Management Act Permits in the near future.

GOLD – Pretium Resources Inc. March 4 reported the following highlights from the fourth quarter of 2013 and updates for the high-grade gold Brucejack project in northern British Columbia. On Dec. 13, Pretium reported the production of 5,865 ounces of gold from the total 10,302 dry metric tons of excavated material from the program. The program was successful in confirming the geological model for the Valley of the Kings, validating the robustness of the global high-grade mineral resource estimate, and facilitating parameter optimization for an updated resource estimate completed by Snowden Mining Industry Consultants in December. According to the estimate, the Valley of the Kings deposit has measured and indicated resources totaling 8.7 million ounces of gold at a grade of 17.6 grams per metric ton gold, and inferred mineral resources of 4.9 million ounces of gold at a grade of 25.6 g/t gold. Pretium’s working capital at Dec. 31 was C$11.2 million. The company also has pending gold sale receipts from the bulk sample program at Brucejack. Subsequent to the end of the quarter, Pretium announced a private placement with a syndicate of agents for 568,182 Investment Tax Credit flow-through common shares of Pretium at a price of C$8.80 per share and 1,863,355 Canadian Exploration Expense flow-through common shares of Pretium at a price of CC$8.05 per share for aggregate gross proceeds of $20 million. The agents were granted an option to purchase, or arrange for substituted purchasers for, up to an additional 745,342 additional Canadian Exploration Expense flow-through common shares of Pretium at the issue price at any point up until 14 days following the closing. An amended feasibility study for Brucejack, expected in the second quarter, will use lower metals prices ($1,100 per ounce gold and $17/oz silver) and an exchange rate of C92 cents-US$1.00. Based on the results from the bulk sample, Pretium said potential refinements are being evaluated in the areas of mining, metallurgy and flow-sheet optimization in order to reduce capital and operating expenditures. The Brucejack project is planned as a 2,700 metric tons per day underground mine using the bulk mining method of longhole open stoping with a cemented paste backfill. The permitting process for an underground mine at Brucejack is underway. In late November 2013, Pretium participated in five Open Houses conducted by the BC Environmental Assessment Office as part of the first public comment period. The company expects to submit an environmental assessment certificate application by early April and engage in the subsequent provincial and federal review process with a target of 2016 for commercial production. Underground exploration during 2013 included drifting and cross-cutting of the Cleopatra structure and Domain 20 and raises on the Cleopatra structure and the 615L drift. While conducting the underground exploration program, high-grade gold mineralization encountered was bagged for future processing. In January, roughly 1,000 metric tons of this material was transported to the contact mill in Montana and processing was completed in February. Pretium said it is waiting on settlement from the sale of the gravity and flotation concentrate produced from the material. An additional 1,000 metric tons of material from the Valley of the Kings is permitted to be excavated and processed in 2014, and Pretium is evaluating the optimal target area for this program. Planning is also underway for an underground drill program targeting very high grade mineralization at depth in the Valley of the Kings.

FINANCE/UPDATE – Imperial Metals Corp. March 3 reported the launch of a senior notes offering, guidance on 2013 annual financial results, and an update on the Red Chris project. Imperial said it intends to offer US$325 million of senior unsecured notes maturing in 2019. The interest rate and other terms of the notes will be determined based on prevailing market conditions. The company intends to use the net proceeds of the notes to repay existing debt, fund capital expenditures related to the Red Chris project, and for general corporate purposes. Concurrently with the consummation of the notes offering, the company intends to enter into a new senior secured credit facility with a syndicate of banks. The new facility is expected to be comprised of a C$50 million tranche to be used for general corporate purposes, and a second C$150 million tranche to be used to fund Red Chris project costs. The closing of the offering and the completion of the new senior secured credit facility are conditional on one another. In addition, the company intends to enter into a C$75 million junior unsecured loan facility with Edco Capital Corp. This corporation is owned by N. Murray Edwards, a significant shareholder of Imperial. This junior unsecured facility is available to fund project cost overruns associated with Red Chris, backstop the payment of certain third party reimbursement obligations relating to the Iskut extension of the Northwest Transmission Line and for general corporate purposes. In connection with this facility, Edco Capital will receive a C$750,000 commitment fee and warrants to acquire 750,000 of Imperial’s shares at C$20 per share. These transactions with Edco are exempt from the formal valuation and minority approval requirements of Multilateral Instrument 61-101 as they represent less than 25 percent of the company’s market capitalization. As at Feb. 28, the company had borrowed C$242.5 million under its C$250.0 million existing line of credit facility with Edco Capital and expects to borrow the remaining C$7.5 million available under that facility in the coming weeks. The 287kv NTL from Skeena substation to Bob Quinn is under construction by BC Hydro with a targeted completion date of May. The 93-kilometer (58 miles) Iskut extension of the NTL from Bob Quinn to Tatogga, being built by Imperial, is expected to be completed by June. Construction of access roads and right of way clearing for the Iskut extension of the NTL is finished. A 150-person camp and laydown yards were established along the route to store and assemble lattice structure components. An experienced power-line constructor has installed roughly 57 percent of the foundations and assembled 82 percent of the structures. Red Chris on-site work began in May 2012. The current status of site work is: a construction camp to house 480 employees and contractors is fully operational; truck shop, warehouse and concentrate shed is complete and currently being used as dry storage for equipment; concrete placement and structural steel erection are complete for the coarse ore handling facilities, the primary crusher building, the mechanically stabilized earth wall, the overland conveyor, the transfer towers and the reclaim tunnel; concrete foundations for the 287kv main substation and the reagent building are complete; pre-engineered process plant building is fully enclosed and internal concrete is approximately 97 percent complete; mechanical installations site wide are about 50 percent complete; North Starter Dam has been built to 1,097-meter elevation providing adequate water storage for mill startup; tailings and reclaim system of pipelines and booster pump house is about 25 percent complete. Planned activities in 2014 will include the final installation of the primary crusher, process water tanks, interior steel, grinding mills, electrical equipment, reagent building and tailings system. Construction of the 287kv 17-kilometer power line from Tatogga to the mine site began in January 2014. Mine pre-development began in January 2014 with the start of stripping of overburden from the East zone of the Red Chris mine. Imperial is targeting June to begin commissioning the Red Chris mine and is aiming to achieve full operations in the fourth quarter of 2014. The cost of constructing the Red Chris mine is now forecast to be C$540 million, about 8.0 percent over the December 2012 estimate. Among the major areas of increase: Certain contractor tenders for 2013 request for proposals were above the cost estimate. These increases were mitigated in part by Red Chris choosing to self-perform the mechanical and piping installations; tailings impoundment area earthwork construction costs overran as additional borrow materials were excavated to uncover suitable filter zone and till core for placement and compaction. The filter zone was screened, hauled and placed with small equipment at extra cost. The additional sand and gravel overburden exposed during borrow development was placed on the future 2015-2016 dam construction footprint, which will result in lower tailing dam construction costs in 2015 than previously forecast. Both these activities were not budgeted in the original estimate.

MINING SURVEY – Improved perceptions of British Columbia as a destination for mineral exploration and development investment are evident in the 2013 Fraser Institute Annual Survey of Mining Companies, the Association for Mineral Exploration British Columbia said March 3. The province’s mineral potential and improvements in political stability and labor and skills availability are highlighted in this year’s survey. BC holds steady in the top-third of the survey, ranking 32nd out of 112 jurisdictions worldwide compared to 31st out of 96 jurisdictions in the previous survey. “BC is only one of three jurisdictions in Canada, along with Alberta and Nunavut that have seen perceptions of government policy improve in the survey continuously over the past five years,” noted AME BC President and CEO Gavin Dirom. British Columbia’s score in the Fraser Institute’s Policy Perception Index has steadily increased to 0.69 (out of a maximum of 1) from 0.49 since 2009/2010. “Significantly, B.C. also tops Canadian jurisdictions in mineral potential according to the survey, up from sixth in 2009/2010. Although the Fraser Institute survey results do not form a comprehensive barometer of industry trends, B.C. has improved relative to other jurisdictions.” The improvement noted in the survey, however, is more dramatically seen through BC’s proportion of mineral exploration expenditures. According to Natural Resources Canada, the province attracted 21 percent of mineral exploration and deposit appraisal expenditures across Canada in 2013, up from 11 percent in 2009. In 2013, British Columbia had the second-highest mineral exploration expenditures on record, at C$467 million. “While there is certain room for improvement, B.C. remains an amicable and stable place to conduct exploration and develop mines,” said David McLelland, chairman of AME BC. “B.C.’s dynamic mineral exploration and development sector is chronically undervalued in the survey, but we certainly see indications that current exploration expenditure trends and stable government policy are increasingly reflected in participants’ perceptions. We are hopeful that at the end of the day, an improved industry outlook on B.C’.s policy as well as mineral potential will result in investment in B.C. exploration projects when commodity prices and market conditions improve.”

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