Red Mountain Overview &
2017 Feasibility Study

The 17,125 hectare Red Mountain Gold Project is located within northwestern British Columbia’s prolific ‘Golden Triangle’, 15 km northeast of the town of Stewart and within Nisga’a traditional territory. In June 2017, IDM announced the results of a Feasibility Study that confirmed the positive economics for a near-term, high-grade, bulk mineable underground gold operation at Red Mountain.

The Red Mountain underground Gold Project is currently in the  Application Review period under the BC Environmental Assessment Act. The EA review and subsequent Minister’s approvals are expected in Q3 2018 and will be a major milestone in the development of Red Mountain. IDM is hopeful that a construction decision for Red Mountain will be possible within the year. 

BC’s ‘Golden Triangle’ hosts multiple large and high-grade past-producing mines and deposits, several of which are approaching potential development. High-grade past-producing gold-silver mines include the Premier, Eskay Creek and Snip operations. Seabridge’s KSM Project and Pretivm’s currently producing Brucejack Mine host extensive metal deposits in the same belt of rocks as Red Mountain.

Feasibility Study Highlights
(all currencies are reported in Canadian dollars unless otherwise specified)

  • Base case economics utilize a gold price of US$1,250 per ounce and silver price of US$17 per ounce and an exchange rate of C$1.00 equals US$0.76;
  • The pre-tax base case economics indicate a Net Present Value (NPV) of C$155 million at a 5% discount rate with an Internal Rate of Return (IRR) of 40% and a 1.7 year payback of initial capital;
  • The after-tax base case economics indicate a NPV of C$104 million at a 5% discount rate with an IRR of 32% and a 1.9 year payback of initial capital;
  • Due to the wide nature of the mineralized zones, the majority of the deposit is amenable to bulk underground mining methods. The project utilizes a year-round design processing rate of 1,000 tonnes per day (tpd) with year-round underground mining;
  • Average life of mine fully-diluted head grades are 7.53 g/t Au and 21.86 g/t Ag;
  • Life of project direct cash cost is estimated at US$539 per ounce of gold recovered.  Net of the silver by-product, costs drop to US$492 per ounce;
  • Initial capital costs are estimated at C$135.7 million, which includes a 10% contingency;    
  • The economic model assumes base case gold recovery rates ranging from 92.8% to 88.1% for gold and 90.3% to 78.3% for silver, depending on the mineralized zone;
  • Average annual payable production of 78,000 ounces of gold and 215,000 ounces of silver;
  • Mine operating life is estimated at 5.4 years with an overall construction and commissioning period of approximately 15 months;
  • Opportunity to reduce project capital costs include sourcing used mining and processing equipment and possible sharing of infrastructure costs for the road and powerline with an established independent power producer looking to develop a run-of-river hydro-electric project adjacent to the proposed mill site location; and,
  • Opportunity to increase potentially mineable ounces north of the current resource area, where mineralization has been traced for a further 800 meters.  Additionally, further resources may be identified through further drilling both up and down-dip from the AV and JW Zones, and along strike from the 141 Zone and Marc Zone.

Summary of Estimated Resources as of January 23, 2017, reported at 3.0 g/t AU cut-off

Classification Tonnage Au (g/t) Ag (g/t) Oz Au Oz Ag
Measured 1,246,000 9.40 30 376,400 1,194,000
Indicated 828,700 7.78 17 207,300 461,700
Measured + Indicated 2,074,700 8.75 25 583,700 1,655,700
Inferred 324,700 6.21 10 64,800 105,500

(1) Measured and Indicated Resources are inclusive of Reserves
(2) Resources that are not mineral reserves do not have demonstrated economic viability

Summary of Estimated Mineral Reserves as of June 26, 2017

Category Diluted
Tonnes
(kt)
Au
Grade
(g/t)
Au
Ounces
(kOz)
Ag
Grade
(g/t)
Ag
Ounces
(kOz)
Proven 1,308 7.82 329 25.09 1,055
Probable 645 6.93 144 15.32 318
TOTAL 1,953 7.53 473 21.86 1,373

1. A gold price of US$1,250/oz and an exchange rate of CDN$1.00 to US$0.76.
2. A gold cut-off grade of 3.55 g/t for longhole mining and 4.10 g/t for development and cut & fill mining.
3. Silver was not used in the estimation of cut-off grades but is recovered and contributes to the revenue stream.
4. Rounding as required by reporting guidelines may result in summation differences.

History and Acquisition by IDM

Red Mountain was discovered in 1989 and explored extensively until 1996 by Lac Minerals Ltd. and Royal Oak Mines Ltd., with 466 diamond drill holes and over 2,000 meters of underground development completed, along with extensive engineering and environmental baseline work. Additional studies were completed over the past 12 years by Seabridge Gold, North American Metals Corp. and Banks Island Gold Ltd.

In April 2014, the Company entered into an Option Agreement to acquire the Red Mountain Project from Seabridge. The acquisition of the Red Mountain Project was completed in May 2017 and is owned 100%, subject to certain underlying agreements and royalties by IDM Mining.

Acquisition Terms:

  • Issuance of 4,955,000 shares to Seabridge - completed
  • $2 million cash payments in first 2 years - completed
  • $7.5 million in property expenditures - completed
  • Upon commencement of commercial production:
    • $1.5 million cash payment to Seabridge on commencement of commercial production

Seabridge will have the right to acquire 10% of the annual production from Red Mountain at a cost of US$1,000/oz for up to a maximum of 50,000 ounces. They can elect to receive a one-time cash payment of $4 million at commencement of production in exchange for the buy-back of the gold metal stream interest

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