TSX-V: TGX
www.truenorthgems.com
July 2016
CAUTIONARY STATEMENT
TSX-V: TGX
§
The information contained in this document is proprietary information of True North Gems Inc. (the Company). It is the property of the Company and shall not be used, disclosed to others
or reproduced without the express written consent of the Company. If consent is given for reproduction in whole or in part, this notice shall appear in any such reproduction.
§
This document contains forward-looking information or forward-looking statements within the meaning of certain securities laws, including provisions of the Securities Act (Ontario) and the
provisions for safe harbour under the United States Private Securities Litigation Reform Act of 1995 concerning anticipated developments and events which the Company has a reasonable
basis to believe may occur in the future. These forward-looking statements are based on projections, expectations and estimates as of the date of this document. Forward-looking
statements are provided for the purpose of providing information about management expectations and plans relating to the future. All of the forward-looking statements made in this
document are qualified by these cautionary statements and those made in other filings with the securities regulators of Canada.
§
Forward-looking statements include, but are not limited to, statements with respect to the future price of rubies and other gemstones, the estimation of mineral resources and reserves, the
realization of mineral resource estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new
deposits, timing of completion of pre-feasibility studies, success of exploration and development activities, permitting time lines, currency fluctuations, requirements for additional capital,
government regulation of exploration operations, environmental risks, title disputes or claims, completion of acquisitions and their potential impact on the Company and its operations,
limitations on insurance coverage and the timing and possible outcome of pending litigation. In certain cases, forward-looking statements can be identified by the use of words such as
plans, expects or does not expect, is expected, budget, scheduled, estimates, forecasts, intends, anticipates or does not anticipate, or believes, or variations of such words and phrases or
statements that certain actions, events or results may, could, would, might or will be taken, occur or be achieved. §
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others: risks related to the
exploration and development of mineral properties; actual results of current exploration activities; current global economic conditions; conclusions of future economic evaluations;
changes in project parameters as plans continue to be refined; environmental risks; future prices of rubies and other gemstones; currency fluctuations; possible variations in ore reserves,
resources, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; risks related to joint
venture operations; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; and those factors discussed in the section
entitled Risk Factors in the annual information form as required by the regularity authorities. §
Although the Company has attempted to identify important factors (which it believes are reasonable) that could cause actual actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. Such statements are based on management’s best judgment based on facts and assumptions that management considers
reasonable, which may prove to be incorrect, including but not limited to assumptions about: general business and economic conditions; interest rates and foreign exchange rates; market
competition; the availability of financing; changes to tax rates and benefits; the Company’s costs of exploration, the ability of the Company to attract and retain skilled employees; and
ongoing relations with Company employees and business partners. The Company makes no representation that reasonable business people in possession of the same information would
reach the same conclusions. Other than as specifically required by law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances
after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results or otherwise.
www.truenorthgems.com
2 CORPORATE STRUCTURE
Common shares
TSX-V: TGX
307,485,383
Warrants
980,656 – Avg strike price $0.09 Options
18,750,000 – Avg strike price $0.13 Fully Diluted 331,946,039 Share Price
$0.10
52 Week High/Low
$0.20/$0.06
Average Daily Volume
~ 114,000
Market Cap
$49 million
Owned By Board/Management 9 million (2.9%)
Halman Aldubi Provident Pension Fund
36.9 million (12%)
www.truenorthgems.com
3 ABOUT US: MANAGEMENT TEAM
TSX-V: TGX
§ Nicholas
Houghton, President & CEO - Accredited Gemologist with 30+ years of international
experience in the jewellery manufacturing and gemstone exploration industry. Member of Ethics
Committee for the International Coloured Gemstone Association. § Bent
Olsvig Jensen, Managing Director Greenland - 15+ years experience practicing management and
negotiations with both public and private institutions in Greenland. Vast experience in cooperation with
the Greenlandic authorities at all levels, and essential knowledge and insight on operations
management in Greenland.
§ Hayley
Henning, VP Sales and Market Development - Ms. Henning has twenty years of marketing and
corporate social responsibility (CSR) experience in the gemstone and jewellery industry. Her career
highlights include her role for the last several years as Executive Director of the Tanzanite Foundation,
the marketing division of TanzaniteOne Mining Ltd
§ Christopher
Richards, CFO - Mr. Richards is Chartered Professional Accountant (CA) with 15+ years of
professional experience in financial and accounting management, with the past 10+ years in the mining
industry. Previously, he worked 7 years with KPMG, was Controller at NovaGold Resources Inc., and VP
Finance and Corporate Secretary at Altynalmas Gold Ltd. (now Kyzyl Gold Ltd.). § Andrew
Fagan, Project Manager - Diamond and gemstone geological consultant with B.Sc. (Hons) and
Master of Science degrees in gemstone geology. Fellow of the Geological Society of London and
Chartered Geologist (C.Geol.).
www.truenorthgems.com
4 AAPPALUTTOQ RUBY PROJECT
TSX-V: TGX
§
Location: Aappaluttoq, Greenland (200m elevation), 150 km south of the capital of Nuuk, 20 km southeast of the
community of Qeqertarsuatsiaat.
§
Mineralization: Chrome Rich Corundum (Ruby and Pink Sapphire) §
Corundum Deposit Type: Hard Rock
§
Exceptionally high grade, simple mining methods
§
Predictability of grade and geological expansion
§
Only 43-101 compliant gemstone deposit in the world
Extraction Methods: Crushing, Optical Sorting and DMS
§
§
Corundum is hard – host minerals are soft
§
Upgrading methods include hand cob, optical sorting,
attrition milling and secondary cleaning
Nuuk Aappalu*oq Ruby Project Finished Product: Consistency in quality, colour, calibration and traceability
§
§
Sales of rough and polished goods
§
A secured long term source of ruby and pink sapphire that allows the market to grow
www.truenorthgems.com
5 LNS-TNG JOINT VENTURE
TSX-V: TGX
Aug 2013 – LNS-TNG entered into
an earn-in option agreement for 20%
of TNGG
Nov 2014 – LNS purchased
additional 7% of TNGG for US$3M
plus commitment to undertake and
additional US$5M in construction
costs
Aug 2015 – Greenland Ventures
purchased 7% of TNGG for US$4M.
TNG has right to buy back up to 50%
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6 AAPPALUTTOQ MINE – 9 YEAR PIT DESIGN
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TSX-V: TGX
7 CORUNDUM GRADE – PRIMARY PIT
TSX-V: TGX
Grade (g/T) 0.01-­‐1.0 1.0 -­‐ 40 40 -­‐ 100 100 -­‐ 250 250 -­‐ 500 500 -­‐ 1000 1000 + Category Volume m3 Indicated Inferred 59,110 24,110 Tonnage Average Grade Average Grade Tonnes Grams/Tonne Carats/Tonne 189,150 77,160 www.truenorthgems.com
313.33 283.46 1,566.65 1,417.28 Contained Corundum Grams million 59.27 21.87 Contained Corundum Carats million 296.33 109.35 8 CONSTRUCTION AND PLANT EQUIPMENT INSTALLATION
TSX-V: TGX
• The workshop is complete, fully equipped and in-use. The shell of
the processing plant is constructed with work on the internal offices
and power distribution room to be completed.
• Installation of the processing plant structural steel and processing
equipment is underway, with one of the three main towers
installed. This structure supports the ore feed conveyor, the primary
ore-hopper, and the scrubber unit. • The primary crusher pad area has been readied and the exterior
conveyor belt has been installed. • All processing plant equipment is on site (including all long-lead
items) and are in the process of being installed.
• Formal hand-over has begun on completed infrastructure including
Helipad, Mine Camp, Workshop, Power Generation Facilities, fuel
tanks and the explosive storage depot.
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9 PIT OPERATIONS
TSX-V: TGX
• Pit operations began in December 2015 focussing on
stripping overburden from the top of the exposed ore. To
date, and area of ~2,450 meters squared was stripped with
overburden thickness varying from 0 to ~5 meters.
• To protect the soft phlogopite-corundum ore from blasting
shockwaves, a ‘blast-screen’ was designed and drilled along
the 120 meters strike length of exposed ore body. A total of
675 top-hammer drillholes were bored parallel to the edge of
the ore.
• Waste rock-blasting and removal commenced in January
2016 and is focused on clearing the first mine bench area
around the ore body to create sufficient working space for
heavy equipment. www.truenorthgems.com
10 COMPLETED MINE SITE AND INFRASTRUCTURE
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TSX-V: TGX
11 MINING SCHEDULE
TSX-V: TGX
Extracted Ore (Tonnes) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Total
Ore tonnes
2,849
12,745
16,560
22,792
22,820
23,564
26,142
31,118
31,178
189,768
Waste tonnes
17,485
167,729
485,012
449,311
571,179
484,642
407,319 249,920 136,266 2,968,862
Corundum Head
grade 1,396
438
274
310
196
186
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244
226
386
292
12 GEMSTONE PRODUCT
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TSX-V: TGX
13 EXPOSED ORE JAN 2016
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TSX-V: TGX
14 AAPPALUTTOQ ECONOMIC HIGHLIGHTS
Revenue US$
$573m
Net Profit After Tax US$
$171m
www.truenorthgems.com
TSX-V: TGX
Post Tax IRR%
122%
Average Ruby and Pink
Sapphire Price US$
$7 per carat
15 PFS FINANCIAL PROJECTIONS
TSX-V: TGX
Aappaluttoq Ruby Project Production results
190 Tonnes (Thousands)
Tonne processed
2,969 Tonnes (Thousands)
Waste rock mined
Stripping ratio
16
9 Years
Mine operational years (starting 2015)
52.7 Grams (Millions)
Total corundum recovered from mine site
Rough gemstones recovered from operations
Average Ruby and Pink Sapphire Price in
17.5 Grams (Millions)
US$33/gram
US$/g1
Estimated revenue US$573 Millions
Economic scenario results
Project Economics
All in cash cost per equivalent rough ct.
recovered2
Total Operating costs
Total Project Capital cost (Initial and
US$3/CT
US$94M
sustaining)3
Total Sustaining Capital cost
US$25M
US$5M
Total Pre-tax cash flow from operations
US$452M
Total Post tax cash flow
US$282M Pre-tax NPV at 8% real discount rate
US$275M
Post-tax NPV at 8% real discount rate
US$171M
IRR
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122%
16 CASH FLOW PROJECTION
TSX-V: TGX
$160,000,000 $140,000,000 $120,000,000 $100,000,000 Gross revenue from sales US $ $80,000,000 Total operaUng costs in US$ $60,000,000 Pre-­‐tax project cash flow $40,000,000 $20,000,000 $0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 -­‐$20,000,000 Operating Year
1
2
3
4
5
6
7
8
9
Gross revenue from sales US $
$12M
$36.3M
$36.8M
$95.6M
$62.2M
$52.4M
$67.5M
$76.2M
$134M
Total operating costs in US$
$5M
$10.8M
$13.7M
$13M
$13.5M
$13.2M
$13.2M
$13.1M
$13M
Pre-tax project cash flow
-$4M
$29.5M
$19.8M
$79.7M
$48.6M
$39.3M
$54.3M
$63.1M
$120M
www.truenorthgems.com
17 RUBY INDUSTRY
TSX-V: TGX
Ruby & diamond ring, by Chaumet
featuring a ruby weighing 32.08 carats
Price realized: $6,600,000
Ruby & diamond Van Cleef & Arpels ring
Price realized: $4,226,500
Ruby & diamond Camelia flower brooch by JAR
Price realized: $4,270,000
www.truenorthgems.com
Ruby and Diamond Ring, featuring the Graff ruby
weighing 8.62 carats
Price Realized : $8,600,000
18 RECORD BREAKING RUBY PRICES
TSX-V: TGX
§ April
12, 2005 – Christie’s New York sale, an 8.01 carat oval-cut Burmese ruby
sold for $2,200,000, setting a world auction record price for a ruby at
$274,656 per carat § February
15, 2006 – Lawrence Graf paid a record $425,000 per carat for an
8.62ct Burmese ruby at Christie’s St. Moritz auction
§ 2007
– 2010 – due to depressed market conditions and ensuing lack of
material in 2008, there were no major ruby sales, however by 2010 prices
began to climb to record levels
$700,000%
$600,000%
$500,000%
§ December
13, 2011 – Christie’s New York auction, in which an 8.24ct ruby and
diamond Van Cleef & Arpels ring belonging to Liz Taylor sold for $4,226,500,
fetching a record price of $512,925 per carat
§ May
14, 2012 – Christie’s International in Geneva, a new record auction was
set with the sale of a ruby and diamond ring from the collection of Brazilianborn philanthropist Lily Safra for $6,600,000. Also sold in the auction was a
ruby and diamond Camelia flower brooch by JAR for $4,270,000
$400,000%
$300,000%
$200,000%
$100,000%
2005%%%%%%%%%%%%%%%2006%%%%%%%%%%%%%%2007%%%%%%%%%%%%%%%2008%%%%%%%%%%%%%%%2009%%%%%%%%%%%%%%%2010%%%%%%%%%%%%%%%2011%%%%%%%%%%%%%%%2012%%%%%%%%%%%%%%%2013%%%%%%%%%%%%2014%%%%%%%%%%%%%%
§ 2012
– Ruby prices continue to climb with a $6.04 Burmese ruby by Etcetera
Limited selling for $551,000 per carat, or $3.3 million
§ In
November 2014, the Graff ruby returned to the Christie’s Geneva jewellery
auction, this time selling for $997,700 USD per carat, or $8.6 million. The sale
of the Graff ruby has set a record not just for a ruby, but for a ruby price per
carat. www.truenorthgems.com
19 SUPPLY AND DEMAND
TSX-V: TGX
Supply
•
•
Historical source of gem quality rubies is Burma (Mynamar)
Little production from this region resulting in severe supply shortage
New Sources
•
•
Most notable is Montepuez in Mozambique (Gemfields) Aappaluttoq in Greenland (True North Gems)
- reliable, long term supply of natural (non-heated) pink sapphires and rubies
Demand
•
•
•
China, India & the USA are leading consumers of gemstones
Indicators reflect the gemstone trend will continue to grow
Opportunity to support industry growth corporately by:
- increased industry professionalism & transparency - social & environmental responsibility - consumer education through brand enhancement (industry & individual companies)
www.truenorthgems.com
20 INDUSTRY SUMMARY
TSX-V: TGX
§
Global ruby market size is
approximately US$2.1 billion*
§
Global pink sapphire market is
approximately US$58.8 million*
§
Global jewellery sales are poised to
grow at 4.6% year-on-year to touch
US$230 billion in 2015**
§
India and China together will emerge
as a market equivalent to US market
• *Source:
• **data
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MVI Marketing
is still being correlated
21 SO, WHY TRUENORTH GEMS?
TSX-V: TGX
The Company has developed from a leading
gemstone explorer into an imminent
gemstone producer
We are opening doors to the entire jewellery
industry due to our extensive experience in
marketing and gemstone sales
Securing long-term buyer contracts with recognized
reputable industry leaders and jewellery
manufacturers
Ability to supply the industry with goods of a
consistent quality Provide continuity of supply from a hard-rock host
deposit and minable resource in a geopolitically,
stable country www.truenorthgems.com
22 IT’S BEEN DONE BEFORE – THE DEBEERS EFFECT
TSX-V: TGX
•
Historically coloured gemstones were always treasured over diamonds. Their rarity and beauty drove
the demand until the discovery of a hard rock diamond source by DeBeers. They recognised that
consistency and control of source could fuel the exponential expansion of the fledgling diamond
industry
•
Since then the DeBeers empire and marketing effect has exponentially driven the entire diamond
market to its current annual value of US$81 billion per annum by the use of pointed marketing and
brand awareness “A Diamond is Forever” (DeBeers, 1947)
•
The coloured gemstone industry is currently valued at US$14 billion per annum, and sits in a
comparative position prior to the DeBeers effect.
•
Gemfields have successfully applied the DeBeers marketing methodology towards coloured
gemstones
•
Colour is now back in demand and through consistency of both supply and source. True North Gems
can drive it along the same exponential growth path. •
Through guaranteed supply and targeted branding True North Gems will achieve market success for
our Greenlandic ruby and sapphires.
www.truenorthgems.com
23 MOVING FORWARD
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TSX-V: TGX
24 KEY OBJECTIVES FOR 2016
TSX-V: TGX
w  Commissioning of the plant
w  Initiation of Marketing
w  Commencement of Sales
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25 KEYS TO UNLOCKING POTENTIAL
§
TSX-V: TGX
Commencement of production §
Sale of inventory produced and onhand §
Extensive marketing of pink
sapphires to raise the awareness
and availability of the gemstone
§
Working jointly with worldwide gem
industry partners to increase
demand for a new source of certified
ruby and pink sapphires
www.truenorthgems.com
26 UNREALIZED GROWTH POTENTIAL
TSX-V: TGX
§
Expansion of production through
familiarity of the deposit will be a natural
lead to increase of profitability
§
Secondary geological expansion deposits
have already been recognized by the
Company and exploration has been
initiated
§
Development of future targets will follow
as market acceptance confirms the need
to supply more material and will be
financed through the future positive
cash-flow
Aappalu*oq Mine Site KiguUlik Expansion Target Siggartartulik Expansion Target Recognized Occurrences:
- Aappaluttoq Mine Site
- Siggartartulik & Kigutilik Expansion Targets
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27