Cautionary Statement and Review of Presentation

Transcription

1 January, 2016

2 Cautionary Statement and Review of Presentation Some of the statements contained in this presentation are forward-looking statements. Such forwardlooking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties such as: ability to raise financing for further exploration and development activities; risks relating to the estimates of reserves, deposits and production costs; extraction and development activities; the risk of commodity price fluctuations; political regulatory and environmental risks; and other risks and uncertainties in the reports and disclosure documents filed by Lexam VG Gold from time to time with Canadian securities regulatory authorities. 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. The complete fourth quarter report including annual information form, management s discussion and analysis, financial statements and the documents used for reference in this presentation can be found on our Company s website at and on SEDAR at The technical information in this presentation has been reviewed and approved by Mr. Kenneth Guy, P.Geo, Manager of Exploration and Qualified Person as defined by the National Instrument

3 Highlights Lexam Projects in the Heart of Timmins Gold Camp, Surrounded by Major Mines NI Updated Resources and PEA on Open Pits Experienced Management - Chairman Rob McEwen Owns 27% of Lexam Focus on Exploration, Testing Economics on Projects, Mergers & Acquisitions 2

4 Properties in Ontario Geo-politically and socio-economically safe mining jurisdiction Access to quality labour & institutions supporting mining Stable regulatory environment Canada s largest gold producer Province with highest mineral production ( $11 B) & exploration ( $.5 B) 3

5 In the Heart of Timmins Gold Camp 70 M Oz Produced Over Past 100 Years Proven mining district, with developed infrastructure for mining & exploration High grade deposits, 2nd largest gold producing region in the western hemisphere Exploration potential adjacent and below to existing resources 4

6 Potential to Expand Mineralization Along Strike Properties Surrounded by Major Mines Lexam mineral properties under-explored Neighbouring large gold deposits 65 M oz Au production within a 10 km radius 5

7 Potential to Expand Resources at Depth Neighbouring Mines with Production from Impressive Depths 55 M oz Au production within 2 km, from depths up to 2.5 km. Current Lexam resources to depths up to 0.5 km. 6

8 Building Company Value Experienced management & industry personnel. Chairman Rob McEwen owns 27% of Lexam. Focus on exploration, testing the economics on projects, mergers & acquisitions. Exploration programs designed to build the resource base, with the objective of identifying economic deposits. Gold resources found at cost of $16/oz. Gold Resources: Open Pit Underground 36 K oz Measured K oz Indicated K oz Inferred. 64 K oz Measured K oz Indicated K oz Inferred. PEA for open pit US$1,250/oz Au, 0.9 C$:US$ exchange rate: NPV = $26 M, IRR = 27% after tax. 7

9 Gold Projects in Timmins Davidson Tisdale Ramp developed deposit on a 31 M oz Au Hollinger-McIntyre-Coniaurum mine trend Fuller Deposit Buffalo Ankerite Ramp developed deposit with gold zones crossing onto Paymaster, where the mineral structure produced 1 M oz Au Buffalo Ankerite mine produced 1 M oz Au Adjacent to 3.4 M oz Au production from Aunor-Delnite mines Paymaster West Porphyry gold deposit adjacent to Goldcorp s 17.2 M oz Au production Dome mine Significant Timmins gold production sourced from porphyry mineralization 8

10 NI Resource Estimates Measured Note on Resources Open Pit Resources Tonnage (Mt) Grade (gpt) Underground Resources Projects: BA - Buffalo Ankerite, DT - Davidson Tisdale (M - Main Zone, S - S Zone), F - Fuller, P - Paymaster. The resources are net to Lexam, calculated at ownership interests: 100% for BA,DT,Fand60%forP.Cut-Offs:OpenPit-0.51gpt(BA,P,F),0.5gpt(DTM);Underground-2.57Au(BA,P,F),2.6gptAu(DTM),2.0gpt(DTS).Theresourceestimates are presented in: "Technical Report and Updated Resource Estimate on the Buffalo Ankerite, Fuller, Paymaster and Davidson Tisdale Gold Deposits dated June 21, 2013 for BA, P, F, DTM (at US$1,600/oz Au price, US$/C$ exchange rate 1:1) and "Davidson Tisdale Gold Property, Timmins, Ontario Technical Report" dated November, 2003 for DTS. Gold (oz) Tonnage (Mt) Grade (gpt) Gold (oz) DTM ,500 DTM ,800 DT S ,800 BA ,800 BA ,200 Indicated P ,000 F ,000 F ,000 DTM ,500 DTM ,500 DTS ,400 Total Measured + Indicated , ,700 BA ,100 BA ,400 P ,000 Inferred P ,000 F ,000 F ,000 DTM ,600 DTS ,200 Total Inferred , ,800 Total Measured + Indicated (Open Pit and Underground) 1,468,500 Total Inferred (Open Pit and Underground) 954,200 9

11 2010 to 2015 Increase of Lexam Resources: Measured + Indicated Up 155%, Inferred Up 54% 10

12 Buffalo Ankerite - On the Mine Trend Lexam properties and neighbouring gold production Located on key geological structure with mineralization from surface to 5,000 ft depth. 1 million oz Au historical production at 6.51 gpt average recovered grade. BA#5 production shaft reached 4,000 ft depth. 11

13 Buffalo Ankerite Advanced Exploration Project Exploration Areas North Zone Mineralization m strike length South Zone Mineralization -1,300 m strike length 12

14 Buffalo Ankerite Open Pit Resource Estimate Zone Tonnes (Mt) Grade (gpt) Au (oz) Open Pit Indicated Resource North ,300 South ,500 Total Indicated ,800 Open Pit Inferred Resource North ,200 South ,100 Total Inferred ,400 Numbers may not add due to rounding. 13

15 Buffalo Ankerite Expansion of the Underground Resource North Zone Underground South Zone Underground Indicated Inferred gpt = 267,200 oz Au gpt = 124,100 oz Au Indicated Inferred gpt = 233,000 oz Au gpt = 243,000 oz Au 14

16 Paymaster Joint Venture with Goldcorp The Best Place to Find Gold Is Next to a Gold Mine! Paymaster West Porphyry Resource Area Buffalo Ankerite Resource Area Fuller Resource Area Paymaster Property Goldcorp Dome Mine 17.2 M oz Au production to date Lexam is operator with over 60% ownership interest. $6 M exploration program, 27 km drilling completed. Expanded gold resource areas from Buffalo Ankerite and Fuller. Delineated additional Paymaster West Porphyry resource area. 15

17 Drilling at Paymaster West Expanded the Resource Paymaster West Project Resource Open Pit Indicated 4.66 M 1.61 gpt Au = 242,000 oz Au Inferred 1.4 M 1.61 gpt Au = 72,000 oz Au Underground Inferred 0.22 M 6.14 gpt Au = 43,000 oz Au Project resource shown on a 100% basis. 16

18 Fuller Property Mineralization Open to West and Below 500 m Property resource between surface and 500 metres depth Recent exploration targeted near surface mineralization in the quartz-feldspar porphyry (QFP) 17

19 Updated Fuller Resource Estimate With Focus on the QFP Structure Open Pit Resource Indicated 5.33 gpt Au = 290,000 oz Au Inferred gpt Au = 112,000 oz Au Underground Resource Indicated gpt Au = 61,000 oz Au Inferred gpt Au = 135,000 oz Au Drill data from press releases dated Nov 29, 2011, Mar 1, Jul 11, 2012, Jan

20 Davidson Tisdale in the Timmins Camp On the Hollinger-McIntyre-Coniaurum Trend, North of the Destor-Porcupine Fault 19

21 Davidson Tisdale Potential to Expand Mineralization in the South Exploration in the south uncovered impressive high grades. Potential to expand the Main and S-Zone mineralizations below 300 m. Potential to follow up on high grades. Hole # Northing Easting Azimuth Dip Depth From (m) To (m) Width (m) Grade (gpt) Drill data from Exploration Report ( ) and Resource Estimate Technical Report on the Tisdale Project dated March 26,

22 Davidson Tisdale Exploration Potential in the North Predecessor exploration: gpt Au (surface grab sample) 26.1 gpt Au over 1.0 m (drill hole, 39 m below surface) Potential to follow up on 2 km strike length of hydrothermal alteration zones in the north. Initial exploration in the north included property compilation & SGH geochemistry. Additional exploration to focus on stripping (to reveal alteration and quartz veining), geological/ structural mapping & surface sampling. 21

23 Metallurgical Testing High Recoveries with Low Reagent Consumption, Short Leach Times at Average Grind Sizes Project Core Assay Grade (gpt) Gravity + Cyanide Gold Recovery Buffalo Ankerite North Zone % Buffalo Ankerite South Zone % Paymaster % Fuller % Davidson Tisdale % Recoveries 90.7% to 98.5%, in line with historic metallurgical results. Reagent consumption kg NaCN, kg CaO/ tonne of feed. High cyanide leach recoveries achieved in 24 hours residence. Grind sizes P80 of μm, while finer grinds would likely yield higher recoveries. 22

24 Highlights from the PEA On Open Pit Structures US$1,250/oz Au case - US$860/oz cash operating cost, after tax: C$50 M cash flow, 2.3 years payback, C$26 M net present value, 27% internal rate of return. Toll milling for all mineralization, contract mining for portion of the waste stripping. Open pits optimization based on US$1,200/oz Au. Net present value calculated at a 7.5% discount rate. Factored in: C$:US$ exchange rate; : 1 strip ratio; - 95% mining extraction; - up to 27.5% mining dilution. C$58 M initial capital cost to construct the mine, 25% contingency priced in. Potential for further cost reduction through additional project optimization studies. 23

25 Capital Structure Price (1) One Year Price Range Market Capitalization Shares Outstanding Shares Diluted Average Volume (2) Cash (3) Lexam VG Gold Inc. (TSX:LEX) $.07 $ $16 M 227 M 228 M 76 K $1.6 M Ownership by Chairman Rob McEwen 27% (1) - Price as of January 15, 2016; (2) - 3 months average daily trading volume combined from Canada, US and EU markets; (3) - Includes cash, cash equivalents and short term investments as of September 30,

26 Directors and Management Directors Mr. Robert R. McEwen, Non-Executive Chairman, has been associated with the mining industry for 30 years. His career began in the investment industry, then in 1990 he entered the mining sector. As founder, Chairman and CEO of Goldcorp Inc., Mr. McEwen took the company from a market capitalization of $50 million to over $10 billion. He is currently the Chairman and CEO of McEwen Mining Inc., which he created by combining US Gold Corporation and Minera Andes Inc. Mr. McEwen is the largest shareholder of McEwen Mining and of Lexam VG Gold, companies exploring for gold, silver, copper, in Canada, USA, Mexico and Argentina. He holds a BA from the University of Western Ontario, London,Ontario,CanadaandanMBAfromSchulich School of Business, York University, Toronto, Ontario, Canada. Mr. McEwen is the recipient of awards such as the PDAC Developer of the Year Award (2001), the Ernst & Young s Ontario Entrepreneur of the Year - Energy Award (2002), the Northern Miners Mining Man of the Year Award (2003), Honorary Doctor of Laws degree from York University (2005), the Most Innovative CEO by Canadian Business Magazine Award (2006), the Order of Canada Award (2007), the Queen Elizabeth's Diamond Jubilee Award (2013) and the Weizmann Canada's Leading Man Award (2014). Mr. Richard W. Brissenden is CA(ON) and graduate of the Director s Education Program of the Institute of Corporate Directors with an ICD.D designation. Mr. Brissenden is the Executive Chairman of Banro Corporation (since January 2015) and was previously Chairman (since May 2014). Mr. Brissenden became a director of Banro Corporation in He also serves as a director for several mining companies, including Corona Gold Corporation (since November 1996), Ryan Gold Corp (since October 2002), McEwen Mining Inc. (since January 2012) and PC Gold Inc. (since 2013). With over 30 years of experience, Mr. Brissenden served as a board member and executive of numerous companies in the mining and mineral exploration sector. Mr. John Drake is the President and co-founder of Drake Goodwin Corporation, an investment firm with interests in financial services, real estate development and manufacturing. Mr. Drake is the Chairman of Critical Outcome Technologies Inc., a TSX Venture listed company. Mr. Drake was appointed an Honorary Colonel of the 1st Hussars of the Royal Canadian Armored Corps. in 1999 (retired in 2011). Mr. Drake obtained his BA and LL.B degrees from the University of Western Ontario and he is a member of the Law Society of Upper Canada. Mr. Robin Dunbar is a director and President and CEO of Mustang Minerals Corp., which is developing a nickel deposit in Manitoba, Canada (TSXV: MUM). Mr. Dunbar is the former Chief Financial Officer and director of Aquila Resources Inc. (TSX: AQA). Mr. Dunbar holds an M.B.A. from Dalhousie University Dr.HughC.Squairis a retired consultant, corporate director and geologist, with over 35 years of field, managerial and exploration consulting experience in the search for precious and base metals within North America and abroad. Dr. Squair has held senior exploration positions with Falconbridge Ltd., Selection Trust Group, Newmont Exploration of Canada, and has worked as a consultant to Kennecott Canada and Watts Griffis & McOuat Ltd. of Toronto. He currently serves on the boards of the following companies: Goldrea Resources Corp., Plato Gold Corp., and Rome Resources Ltd. Dr. Squair is a graduate of the Universities of Saskatchewan with a BA in geology, and London, UK, with a PhD in mining geology. Continued 25

27 Directors and Management Directors Mr. John Tait is a consultant to the resource sector. He currently serves as Chief Executive Officer and President of Superior Copper Corporation (TSXV: SPC) and White Pine Resources Inc., and he served as Chief Operating Officer of VG Gold Corp., as President and director of Southern Star Resources Inc. (TSXV: SSR), which merged with Exall Resources to form Gold Eagle Mines Ltd. (TSX: GEA) and as director of Merc International Minerals Inc. (TSXV: MRK). Gold Eagle Mines Ltd. was purchased by Goldcorp Inc. for $1.5 billion in Mr. Tait has over 20 years of experience in the mining exploration business. Mr.RobertE.VanTassellis a retired geologist and corporate director. Mr. Van Tassell currently sits on the board of Plato Gold Corp., a junior mineral exploration company. Management Mr. Andrew Iaboni, CFO, previously served as Lexam s Controller and currently serves as Vice President - Finance of McEwen Mining Inc. Prior to joining Lexam and McEwen Mining in 2010, Mr. Iaboni served as Finance Manager for Central Sun Mining from 2007 to 2009 and was employed with Ernst & Young from 2004 to Mr. Iaboni is a Chartered Accountant and holds a Bachelor of Commerce and Major in Economics from the University of Toronto. Mr. Ken Guy, Exploration Manager, P.Geo. and a Qualified Person according to NI , has 30 years of exploration experience in Ontario, Canada. Mr. Guy worked as an exploration manager with BP Selco, Getty Metals and Cypress Minerals prior to joining VG Gold in Ms. Mihaela Iancu, Director, Corporate Administration, has been working in the mining industry since 2008 as a consultant. Prior to joining the mining industry, she worked in insurance and in the academic environment. Ms. Iancu holds graduate degrees in Mathematics from the University of Bucharest and York University. Ms.ChristinaMcCarthy,DirectorofBusinessDevelopment,entered the mining industry in 2007 as an Exploration Geologist for Blackstone Ventures Inc. She further enriched her experience in the capital markets (at TSX Group - Equicom and BayFront Capital Partners) and as a Desk Analyst and Mining Specialist at Euro Pacific Canada. Most recently she was with Haywood Securities as a mining specialist for the Institutional Sales. Ms. McCarthy attended Brock University enrolled in the Earth Science/Geology program in St. Catharines, Ontario and has also completed the Canadian Securities Course and Conduct and Practices Handbook Course from the Canadian Securities Institute. Mr. Gerry McDonald, Operations Manager, has 35 years of mining experience in Ontario, Canada. After graduating the Haileybury School of Mines he worked with Noranda Mines Mining subsidiary, that built and operated several new mines and mills in Ontario. He was the mine manager at Kerr Addison Mine for 3 years and worked for Westdome Gold for 11 years, where he initiated production at two mines and a mill prior to joining VG Gold in

28 Contact Information Lexam VG Gold Inc. 150 King Street West Suite 2800, P.O. Box 24 Toronto, Ontario Canada, M5H 1J9 Tel: Toll Free: Fax: Investor Relations Contact Mihaela Iancu Director, Corporate Administration Tel: Ext info@lexamvggold.com 27