NORTHERN GOLD MINING INC.
Annual Information Form
For the year ended March 31, 2012
July 25, 2012
Introductory Notes
Throughout this annual information form (“AIF”), we, us, our, Northern Gold and the Company mean Northern
Gold Mining Inc.
All dollar amounts are in Canadian dollars unless stated otherwise.
The information in this AIF is as of March 31, 2012. We prepare the financial statements referred to in the AIF
according to International Financial Reporting Standards (“IFRS”), and file the AIF with the appropriate
regulatory authorities in Canada. Information contained on our website is not part of this AIF, and is not
incorporated by reference.
You can find more information about Northern Gold, including information about executive and director
compensation, principal holders of our securities, and securities authorized for issue under equity
compensation plans, in our most recent management information circular. You should also read the
Company’s audited consolidated financial statements and management’s discussion and analysis (“MD&A”)
for the year ended March 31, 2012 which contain additional information. These can be found on SEDAR
(www.sedar.com), or you can request a copy by writing to:
Northern Gold Mining Inc.
Chief Governance Officer and Corporate Secretary
20 Victoria Street, Suite 800
Toronto, Ontario CANADA M5C 2N8
Cautionary Statements Regarding Forward-Looking Information
This AIF contains “forward-looking information” which may include, but is not limited to, statements with
respect to the future financial and operating performance of the Company, its subsidiaries and affiliated
companies, its mining project, the future prices of gold, the estimation of mineral reserves and mineral
resources, the realization of mineral reserve and resource estimates, operating and exploration expenditures,
costs and timing of the development of new deposits, costs and timing of future exploration, requirements for
additional capital, governmental regulation of mining operations and exploration operations, timing and
receipt of approvals, consents and permits under applicable mineral legislation, environmental risks, title
disputes or claims, limitations of insurance coverage and regulatory matters. Often, but not always, forwardlooking statements can be identified by the use of words such as “plans”, “expects”, “estimates”, “intends”,
“targets”, “anticipates” or “believes” or variations (including negative variations) of such words and phrases,
or may be identified by statements to the effect that certain actions, events or results “may”, “could”, “would”,
“should”, “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 and/or its subsidiaries to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking statements. Such factors include,
among others, future prices of gold; general business, economic, competitive, political and social
uncertainties; the actual results of current exploration activities; conclusions of economic evaluations and
studies; fluctuations in the value of the United States dollar relative to the Canadian dollar; changes in project
parameters as plans continue to be refined; possible variations of ore grade or projected recovery rates;
accidents, labour disputes and other risks of the mining industry; political instability or insurrection or war;
labour force availability and turnover; the availability of suitable road and port facilities; delays in obtaining
financing or governmental approvals or in the completion of exploration and development activities; as well
as those factors discussed in the section entitled “Risk Factors” in this Annual Information Form. Although the
Company has attempted to identify important factors 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 to differ from those anticipated, estimated or intended. Forward-looking statements
contained herein are made as of the date of this Annual Information Form and the Company disclaims any
obligation to update any forward-looking statements, whether as a result of new information, future events
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or results or otherwise. 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 due to the inherent
uncertainty therein. Subject to applicable law, the Company assumes no obligation to update or revise any
forward-looking statement, whether as a result of new information, future events or any other reason.
Basis of Presentation
For the meanings of certain technical terms used and not otherwise defined in this AIF, see the “Technical
Glossary”. Some terms with a technical meaning related to mineral matters are defined by the Canadian
Institute of Mining, Metallurgy and Petroleum — Definitions Adopted by CIM Council.
3
TABLE OF CONTENTS
Page
Introductory Notes ............................................................................................................................... 2
Cautionary Statements Regarding Forward-Looking Information ..................................... 2
Basis of Presentation ........................................................................................................................... 3
Incorporation ......................................................................................................................................... 7
General Development of the Business ........................................................................................... 7
Three Year History .................................................................................................................................... 7
2009 ................................................................................................................................................................ 7
2010 ................................................................................................................................................................ 7
2011 ................................................................................................................................................................ 8
2012 ................................................................................................................................................................ 8
Acquisitions............................................................................................................................................. 9
About Northern Gold ............................................................................................................................ 9
Employees ................................................................................................................................................ 9
Social and Environmental Policies .................................................................................................. 9
Risk Factors ............................................................................................................................................. 9
Reliance on Single Project .................................................................................................................. 9
Mineral Exploration, Development and Production Activities Inherently Risky ........... 9
Uncertainty of Mineral Resources and Reserves ..................................................................... 10
Uncertainty of Additional Financing and Possible Dilution ................................................. 10
Expected Continued Operating Losses ........................................................................................ 11
Dependence on Key Management and Employees .................................................................. 11
Global Financial Condition ............................................................................................................... 11
Volatility of Market Price of Securities ........................................................................................ 11
Fluctuation of Mineral Prices .......................................................................................................... 12
Possible Failure to Obtain Mining Licenses ............................................................................... 12
Risk of Project Delay .......................................................................................................................... 12
Infrastructure ....................................................................................................................................... 12
Environmental Risks .......................................................................................................................... 13
Competition ........................................................................................................................................... 13
Title Risks .............................................................................................................................................. 13
Obligations and Potential Liabilities with Respect to Acquired Properties ................... 13
First Nations .......................................................................................................................................... 14
Acquisition of Additional Mineral Properties ........................................................................... 14
Insurance Risk ...................................................................................................................................... 14
Litigation Risk ...................................................................................................................................... 15
Risks Relating to Statutory and Regulatory Compliance ...................................................... 15
Conflicts of Interest ............................................................................................................................ 15
Mineral Projects .................................................................................................................................. 15
Garrison Gold Property ..................................................................................................................... 16
Description and Location ..................................................................................................................... 16
Accessibility, Climate, Local Resources, Infrastructure and Physiography ..................... 16
History......................................................................................................................................................... 18
4
Geological Setting ................................................................................................................................... 19
Property Geology .................................................................................................................................... 20
Garrcon Deposit ................................................................................................................................... 21
Exploration ................................................................................................................................................ 21
Mineralization .......................................................................................................................................... 23
Typical Mineralized Intersections .................................................................................................... 24
Drilling ........................................................................................................................................................ 25
Sampling, Analysis, Data Verification and Security of Samples ............................................ 26
Sample Security ....................................................................................................................................... 27
Data Compilation .................................................................................................................................... 27
Analysis ....................................................................................................................................................... 27
Data Verification ..................................................................................................................................... 29
Metallurgical Testing ............................................................................................................................. 30
Mineral Resource and Mineral Reserves Estimate for Garrcon Deposit ........................... 32
Preliminary Economic Assessment Study ..................................................................................... 33
Exploration Plans .................................................................................................................................... 34
Jonpol Deposit ...................................................................................................................................... 35
Exploration ................................................................................................................................................ 35
Mineralization .......................................................................................................................................... 36
Drilling ........................................................................................................................................................ 38
Sampling, Analysis, Data Verification and Security of Samples ............................................ 38
Metallurgical Testwork ........................................................................................................................ 38
Mineral Resource and Mineral Reserves Estimate .................................................................... 38
Exploration Plans .................................................................................................................................... 39
Estimated Mineral Resources Summarized for the Garrison Gold Property ................... 40
Dividend Policy .................................................................................................................................... 40
Share Capital ......................................................................................................................................... 40
Market for Securities ......................................................................................................................... 41
Directors and Officers........................................................................................................................ 41
Securities owned ................................................................................................................................. 44
Corporate Cease Trade Orders and Bankruptcies................................................................... 44
Penalties and Sanctions .................................................................................................................... 44
Personal Bankruptcies ...................................................................................................................... 45
Conflicts of Interest ............................................................................................................................ 45
Board Committees .............................................................................................................................. 45
Term ........................................................................................................................................................ 45
Audit Committee.................................................................................................................................. 45
Charter ........................................................................................................................................................ 46
Composition of the Audit Committee .............................................................................................. 46
Audit Committee Oversight ................................................................................................................ 46
Pre-Approval Policies and Procedures ........................................................................................... 46
Audit Fees .................................................................................................................................................. 46
Exemption.................................................................................................................................................. 47
Promoter ................................................................................................................................................ 47
Legal Proceedings ............................................................................................................................... 47
Interest of Management and Others in Material Transactions ........................................... 47
5
Transfer Agent and Registrars ....................................................................................................... 47
Material Contracts .............................................................................................................................. 47
Interest of Experts .............................................................................................................................. 47
Additional Information ..................................................................................................................... 48
TECHNICAL GLOSSARY ...................................................................................................................... 49
APPENDIX A ........................................................................................................................................... 51
6
Incorporation
Northern Gold was incorporated under the Business Corporations Act (Ontario) as 2101253 Ontario Inc. on
May 1, 2006. Articles of Amendment were filed on June 22, 2006 effecting a name change to Northern Gold
Mining Inc. The registered and head office of the Company is located at Suite 800, 20 Victoria Street, Toronto,
Ontario, Canada, M5C 2N8.
The Company is a “reporting issuer” in Ontario, Alberta and British Columbia as such term is defined in the
Securities Act (Ontario) and similar legislation in the other provinces of Canada. Its common shares trade on
the TSX Venture Exchange (“TSXV”) under the symbol NGM.
General Development of the Business
Northern Gold is engaged in the exploration and possible development of the Garrison Gold Property, and will
pursue a growth strategy that takes advantage of the strengths of its existing management team, particularly
with respect to resource project management. In addition to developing its current mineral properties, the
Company is pursuing a strategy of evaluating and potentially acquiring interests in other attractive mineral
properties that the Company believes will be accretive to its overall growth strategy through staking, joint
ventures and purchases.
Three Year History
2009

In January 2009, the Company signed a letter of intent (“LOI”) with ValGold Resources Ltd.
(“ValGold”) to acquire up to an 80% undivided interest in the Garrison Gold Property located in
Garrison Township, approximately forty kilometers north of our field office in Kirkland Lake, Ontario
and one hundred kilometers east of Timmins, Ontario, Canada.

On March 6, 2009, the Company completed a rights offering pursuant to which 4,392,647 rights were
exercised for total proceeds of $219,632.35.

In July 2009, the Company issued 4,432, 659 common shares at $0.05 per common share pursuant to
a non-brokered private placement for total gross proceeds of $221,633.

In July 2009, the Company issued 6,923,076 flow-through units at a price of $0.065 per flow-through
unit pursuant to a non-brokered private placement with Mineral Fields Group for total gross
proceeds of $450,000.

In September 2009, the Company entered in to an Option Agreement with ValGold pursuant to which
Northern Gold could earn up to an 80% undivided interest in the Garrison Gold Property in two
phases, with an option to acquire a 50% undivided interest in the property by making cash payments
to ValGold of $1,000,000 over four years, with all or part of the payments being made in Northern
Gold stock at Northern Gold’s option, using a 20 day weighted average price. To earn the 50%
interest, Northern Gold was required to complete work on the property in the amount of $4,000,000
over four years, with $500,000 being spent on the property in the first year of the agreement and not
less than $750,000 to be expended in each of the subsequent years. After earning the 50% interest,
the Company was eligible to increase its interest to 80% by making additional cash payments of
$1,000,000 over four years, with all or part of the payments being made in Northern Gold stock
equivalent, using a 20 day value weighted average price, and by completing additional work on the
property in the amount of $4,000,000 over four years. On October 20, 2009, the Company filed a NI
43-101 compliant technical report on SEDAR for the Garrison Gold Property.
2010

In July 2010, the Company issued 9,002,678 flow-through units at a price of $0.14 per flow-through
unit for gross proceeds of $1,260,375, and 10,783,696 hard dollar units at $0.115 per hard dollar unit
for gross proceeds of $1,240,125 (of which 1,524,783 hard dollar units were sold on a non-brokered
basis) for total gross proceeds of $2,500,500 pursuant to a brokered private placement with Bayfront
Capital Partners Ltd.
7

On November 1, 2010, the Company issued 1,110,000 flow-through units at $0.45 per flow-through
unit and 7,707,500 hard dollar units at $0.40 per hard dollar unit for aggregate gross proceeds of
$3,582,500 pursuant to the first tranche of a brokered private placement with Canaacord Genuity
Corp. and Bayfront Capital Partners Ltd. acting as co-lead agents of a syndicate which included GMP
Securities L.P. (collectively, the “Agents”). On November 10, 2010, the Company issued 3,150,000
flow-through units at $0.45 per flow-through unit for aggregate gross proceeds of $1,417,500
pursuant to the second tranche of the brokered private placement with the Agents.

On November 5, 2010 the Company filed an NI 43-101 compliant technical report on SEDAR for the
Garrcon Deposit.
2011

On April 12, 2011, the Company announced that it had acquired a 96.4% interest in the Linton claim
group (“Linton Claim Group”), consisting of eight patented mining claims, increasing the size of the
Garrison Gold Property to 476.1 hectares.

On April 19 2011, the Company announced that it had acquired a 100% interest in the Sims claim
group (“Sims Claim Group”) consisting of 24 staked mining claims covering 398.7 hectares and
strategically located in Harker Township, 3.9km from the Garrison Gold Property.

On May 13, 2011, the Company acquired a 100% interest in the Garrison Gold Property through an
agreement with ValGold announced on April 7, 2011, subject to a royalty more thoroughly described
in the “History” section, below. In consideration for the sale, ValGold received a cash payment of
$325,000 and a promissory note for an additional $325,000 to be paid on or before August 13, 2011,
16 million common shares in Northern Gold, giving ValGold aggregate ownership of approximately
14.8% of the issued and outstanding shares of the Company on a non-diluted basis, and a 2% net
smelter royalty, of which half (1%) can be acquired by Northern Gold for $5 million paid to ValGold
at any time upon the earlier of thirty-six months following the date of closing and the commencement
of commercial production. The remaining 1% can be acquired for a further payment of $10 million at
any time upon the earlier of seventy-two months following the date of closing and the
commencement of commercial production. Pursuant to the terms of the original Option Agreement
with ValGold and at the time of closing the Buy Out, Northern Gold was in the second year of the
option agreement and had made $400,000 payments ($200,000 in cash and the issuance of 2.2
million shares in satisfaction of the other $200,000 payment obligation) and had incurred over
$3,000,000 in exploration expenditures.

On May 25, 2011, the Company announced it had acquired a 100% interest in the Plato claim group
(“Plato Claim Group”) consisting of 24 staked mining claims covering 370.4 hectares.

In September 2011, the Company completed a non-brokered private placement for 25,724,260
common shares for aggregate gross proceeds of $10,870,471, comprised of 11,205,078 on a hard
dollar basis at $0.40 for aggregate gross proceeds of $4,482,031 and 14,519,182 common shares
issued on a flow-through basis at $0.44 per common share for aggregate gross proceeds of
$6,388,440. Lead investors included funds managed by Sprott Asset Management L.P.
2012

On April 30, 2012, the Company acquired the final 3.6% interest in the Linton Claim Group, resulting
in a 100% undivided ownership stake.

On June 1, 2012, the Company filed an NI 43-101 compliant technical report on SEDAR for the
Garrison Gold Property.
8
Acquisitions
There were no significant acquisitions during the Company’s most recently completed financial year ended
March 31, 2012 for which disclosure is required under Part 8 of National Instrument 51-102 Continuous
Disclosure Obligations.
About Northern Gold
Northern Gold holds a 100% interest in the Garrison Gold Property, and associated mineral claims within 10
kilometers of the Garrison Gold Property, located within the Abitibi Greenstone Belt in Ontario, Canada. The main
productive structures in this part of the Abitibi Greenstone Belt are the Destor-Porcupine Fault System, which
extends from east of Val d’Or, Quebec to west of Timmins, Ontario and the Larder Lake/Cadillac Break which
splays off the south side of the Destor-Porcupine Fault System near the community of Cadillac, Quebec. The
Company is ideally positioned to take advantage of the existing infrastructure including access roads, water, and
electricity servicing the area.
Employees
Northern Gold had 43 employees and 5 consultants located in Toronto and Kirkland Lake (including 3
employees and 1 consultant in the Company head office in Toronto) as of March 31, 2012. Management
believes that labour relations at its operations are good. Despite this, increased demand for skilled workers in
the resource industry and increased demand for higher wages have led to higher employee turnover than
expected and increased costs. See “Risk Factors – Availability of Key Executives and Other Personnel”
Social and Environmental Policies
Northern Gold is aware that its mining exploration practices affect its local community and that careful
consideration is required to enhance conditions in that community where possible. To this extent we are
actively working with the neighbouring First Nations to support their community, hire local band members,
and continue to further the good relations that have been developed to date. The Company is a significant
employer in the region and plans to continue to provide jobs and training as it expands to production.
The Company is also committed to responsible environmental practices and considerations at each stage of
project planning. To this extent the Company has retained Blue Heron Solutions for Environmental
Management Inc. to ensure mine development and planning comply with environmental regulations and to
optimize environmental processes.
Risk Factors
The following is a brief description of distinctive or special characteristics of Northern Gold’s operations and
industry, which may have a material impact on, or constitute risk factors in respect of, the Company’s
financial performance, business and operations.
Reliance on Single Project
The Company’s only material mineral property is the Garrison Gold Project. If the Company is able to
successfully develop the Project, unless it acquires or develops additional material properties or projects, or
discovers additional deposits, the Company will be solely dependent upon a single mine operation for its
revenue and profits, if any. The Company cannot ensure that that it will establish any further reserves or
successfully develop any mining operations at the Project.
Mineral Exploration, Development and Production Activities Inherently Risky
The business of mineral exploration and extraction involves a high degree of risk. Few properties that are
explored are ultimately developed into production and there is a risk that none of the Company’s properties
will ultimately be developed into mines. Among the many uncertainties inherent in any gold exploration and
9
development program are the location of economic resources, the development of appropriate metallurgical
processes, the receipt of necessary governmental permits and the construction of mining and processing
facilities. Other risks involved in extraction operations and the conduct of exploration programs include
unusual or unexpected formations, seismic activity, fires, power outages, labour disruptions, flooding,
explosions, rock bursts, cave-ins, slope failures, variations in grade, deposit size, density and other geological
problems, hydrological conditions, metallurgical and other processing problems, mechanical equipment
performance problems, the unavailability of materials and equipment including fuel, unanticipated
transportation costs, unanticipated regulatory changes, unanticipated or significant changes in the costs of
supplies including, but not limited to, petroleum, and adverse weather conditions and other conditions
involved in the drilling and removal of material, any of which could result in damage to, or destruction of,
mines and other producing facilities, damage to life or property, environmental damage and possible legal
liability. Although Northern Gold carries liability insurance with respect to its mineral exploration operations,
the Company may become subject to liability for damage to life and property, environmental damage, caveins or hazards against which it cannot insure.
Assuming discovery of an economic orebody, depending on the type of mining operation involved, several
years may elapse from discovery until commercial operations are commenced and during such time the
economic feasibility of production may change. Accordingly, there can be no assurance that the Company’s
current or future exploration and development programs will result in any new economically viable mining
operations or yield new mineral reserves.
Uncertainty of Mineral Resources and Reserves
The figures for mineral resources and reserves stated in this AIF, or in the documents incorporated by
reference, are estimates and no assurance can be given that the anticipated tonnages and grades will be
achieved or that the indicated level of recovery of gold will be realized. Market price fluctuations of gold, in
addition to increased production costs or reduced recovery rates may render resources uneconomic.
Moreover, short-term operating factors relating to the mineral deposits, such as the need for orderly
development of the deposits or the processing of new or different grades of ore, may cause any mining
operation to be unprofitable in any particular accounting period.
Until mineral reserves or mineral resources are actually mined and processed, mineral resource and mineral
reserve grades must be considered as estimates only. In addition, mineral reserves and mineral resources
may vary depending on, among other things, metal prices and currency exchange rates. Any material change
in mineral reserves, mineral resources, grade or stripping ratio may affect the economic viability of the
properties. In addition, there can be no assurance that gold recoveries or other metal recoveries in small scale
laboratory tests will be duplicated in larger scale tests under on-site conditions or during production.
The Company’s mineral projects are in the exploration stage. Until mineral resources on these exploration
properties are categorized as mineral reserves, the known mineralization at these projects is not determined
to be economic. The Company’s ability to put its exploration properties into production will be dependent
upon the results of further drilling and evaluation. There is no certainty that expenditures made in the
exploration of the Company’s mineral properties will result in the identification of commercially recoverable
quantities of ore or that mineral reserves will be mined or processed profitably. Greater assurance will
require completion of comprehensive feasibility studies and, possibly, further associated exploration and
other work that concludes a potential mine at each of these projects is likely to be economic.
Uncertainty of Additional Financing and Possible Dilution
Northern Gold will require significant additional capital to fund its anticipated capital and operating costs.
The Company may require additional financing from external sources to meet such requirements. There can
be no assurance that such financing will be available to the Company or, if it is, that it will be offered on
acceptable terms. If additional financing is raised through the issuance of equity or convertible debt securities
of the Company, the interests of existing shareholders in the net assets of the Company will be diluted. Any
failure of the Company to obtain required financing on acceptable terms could have a material adverse effect
10
on the Company’s financial condition, results of operations and liquidity and require the Company to cancel
or postpone planned capital investments.
Expected Continued Operating Losses
The Company has no operating history and there can be no assurance that the Company will ever be
profitable. The Company has experienced losses from operations in every fiscal year since its inception in
2006. The Company expects to incur losses for the foreseeable future. There is no guarantee that the
Company will be able to reverse the operating losses or that the Company will ever be consistently profitable.
Dependence on Key Management and Employees
The success of the operations and activities of Northern Gold is dependent to a significant extent on the
efforts and abilities of its management, key employees and outside contractors. Relationships between the
Company and its employees may be affected by changes in the scheme of labour relations that may be
introduced by relevant government authorities in the jurisdictions that the Company operates. Changes in
applicable legislation or in the relationship between the Company and its employees or contractors may have
a material adverse effect on the Company’s business, results of operations and financial condition. The
Company’s ability to manage its operating, development, exploration and financing activities will depend in
large part on the efforts of key management personnel. The loss of the services of one or more of these
individuals could adversely affect Northern Gold’s profitability, results of operations and financial condition.
The Company faces significant competition for qualified personnel and there can be no assurance that the
Company will be able to attract and retain such personnel. The Company does not hold key person insurance
on any of these individuals.
Global Financial Condition
Global financial conditions in recent years have been characterized by weakness and uncertainty, and access
to public financing has been negatively impacted by disruptions in the credit and capital markets. These
factors may impact the ability of the Company to obtain equity or debt financing in the future on terms
favourable to the Company. Additionally, these factors, as well as other related factors, may cause decreases
in asset values that are deemed to be significant or prolonged, which may result in impairment losses. If such
increased levels of volatility and market turmoil continue, Northern Gold’s operations could be adversely
impacted and the trading price of its common shares may be adversely affected.
Volatility of Market Price of Securities
The trading price of the Company’s common shares has been and may continue to be subject to large
fluctuations which may result in losses for some of its investors. The trading price of the Company’s common
shares may increase or decrease in response to a number of events and factors, including:
•
changes in the market price and expected market price of gold;
•
current events affecting the economic situation in Canada, the United States and elsewhere;
•
trends in the mining industry and the markets in which the Company operates;
•
changes in financial estimates and recommendations by securities analysts;
•
acquisitions and financings;
•
the Company’s inability to achieve its guidance or meet expectations of market participants;
•
operating and share price performance of other companies that investors may deem comparable;
•
purchases or sales of blocks of the Company’s common shares; and
•
general investor sentiment and tolerance to risk.
11
Wide price swings are currently common in the markets on which the Company’s securities trade. This
volatility may adversely affect the prices of the Company’s common shares regardless of the Company’s
operating performance. As well, there can be no assurance that an active market for the securities of the
Company will be sustained.
Fluctuation of Mineral Prices
The success of the Northern Gold’s Garrison Gold Project will be primarily dependent on the future price of
gold. Gold prices are subject to significant fluctuation and are affected by a number of factors which are
beyond the control of the Company. Such factors include, but are not limited to, interest rates, exchange rates,
inflation or deflation, fluctuation in the value of the United States dollar and other foreign currencies, global
and regional supply and demand, and the political and economic conditions of major gold-producing
countries throughout the world. The price of gold has fluctuated widely in recent years, and future serious
price declines could cause continued development of, and commercial production from, the Company’s
properties to be impracticable or uneconomic. Depending on the price of gold, projected cash flow from
planned mining operations may not be sufficient and the Company could be forced to discontinue
development and may lose its interest in, or may be forced to sell, some of its properties. Future production
from the Company’s mining properties is dependent on gold prices that are adequate to make these
properties economically viable.
Furthermore, recalculating reserve and resource estimates and life-of-mine plans using significantly lower
gold prices could result in material write-downs of the Company’s investment in mining properties and
increased amortization, reclamation and closure charges. In addition to adversely affecting the Company’s
mineral resource and reserve estimates and its financial condition, declining metal prices can impact
operations by requiring a reassessment of the feasibility of a particular project. Such reassessment may be
the result of a management decision or may be required under financing arrangements related to a particular
project. Even if the project is ultimately determined to be economically viable, the need to conduct such a
reassessment may cause substantial delays or may interrupt operations until the reassessment can be
completed.
Possible Failure to Obtain Mining Licenses
With respect to any exploration property, Northern Gold may not be able to obtain the necessary licenses or
permits to conduct mining operations on the properties, and thus would realize no benefit from its
exploration activities on such properties.
Risk of Project Delay
There are significant risks that the commencement and completion of construction of a mine on any of the
Company’s properties could be delayed due to circumstances beyond the Company’s control. Such risks
include delays in obtaining environmental and construction authorizations and permits, delays in finalizing
all necessary detailed engineering and construction contracts, as well as unforeseen difficulties encountered
during the construction process.
Infrastructure
Development and exploration activities depend on adequate infrastructure, including reliable roads, power
sources, water supply and port (including storage) facilities. The Company’s inability to secure adequate
water, power resources or appropriate port (including storage) facilities, as well as other events outside of its
control, such as unusual weather, sabotage, government or other interference in the maintenance or
provision of such infrastructure, could adversely affect the Company’s operations and financial condition.
12
Environmental Risks
Mining operations have inherent risks and liabilities associated with pollution of the environment and the
disposal of waste products occurring as a result of mineral exploration and production. Laws and regulations
involving the protection and remediation of the environment and the governmental policies for
implementation of such laws and regulations are constantly changing and are generally becoming more
restrictive. Northern Gold cannot give any assurance that, notwithstanding its precautions, breaches of
environmental laws (even if inadvertent) or environmental pollution will not materially and adversely affect
its financial condition and its results from operations.
Previous mining operations may have caused environmental damage at certain of Northern Gold’s properties.
It may be difficult or impossible to assess the extent to which such damage was caused by Northern Gold or
by the activities of previous operators, in which case, any indemnities and exemptions from liability may be
ineffective.
There is no assurance that future changes in environmental regulation, if any, will not adversely affect the
Company’s operations. Environmental hazards may exist on the properties on which the Company holds
interests which are unknown to the Company at present and which have been caused by previous or existing
owners or operators of the properties. Reclamation costs are uncertain and actual expenditures may differ
from expected expenditures required.
Competition
Northern Gold’s business is intensely competitive, and the Company competes with other mining companies,
many of which have greater resources and experience. Competition in the precious metals mining industry is
primarily for: (i) mineral rich properties which can be developed and produced economically; (ii) the
technical expertise to find, develop, and produce such properties; (iii) the labour to operate the properties;
and (iv) the capital for financing development of such properties. Many competitors not only explore for and
mine precious metals, but conduct refining and marketing operations on a world-wide basis and some of
these companies have much greater financial and technical resources than the Company. Such competition
may result in the Company being unable to acquire desired properties, recruit or retain qualified employees
or acquire the capital necessary to fund its operations and develop its properties. The Company's inability to
compete with other mining companies could have a material adverse effect on the Company's results of
operations.
Title Risks
The acquisition of title to mineral properties is a very detailed and time-consuming process. Title to, and the
area of, the mineral property may be disputed. There is no guarantee that such title will not be challenged or
impaired. There may be challenges to the title of the properties in which the Company has an interest, which,
if successful, could result in the loss or reduction of the Company’s interest in the properties.
Although title to its material properties has been reviewed by or on behalf of Northern Gold, no assurances
can be given that there are no title defects affecting the properties. Title insurance generally is not available
for mining claims in Canada and Northern Gold’s ability to ensure that it has obtained secure claim to
individual mineral properties may be severely constrained. The Company has not conducted surveys of all of
the claims in which it holds direct or indirect interests, therefore, the precise area and location of such claims
may be in doubt. The properties may be subject to prior unregistered liens, agreements, transfers or claims
including native land claims, and title may be affected by, among other things, undetected defects. In addition,
Northern Gold may be unable to conduct work on the properties as permitted or to enforce its rights with
respect to its properties.
Obligations and Potential Liabilities with Respect to Acquired Properties
Under agreements for the acquisition of existing and future properties, Northern Gold has assumed or may
assume liabilities relating to the mineral properties, surface buildings, mill and tailings, past, present and
future. While Northern Gold conducts due diligence with a view to determining, among other things, what
13
these obligations and liabilities may be, there is no assurance that Northern Gold has been or will be able to
determine accurately the existence or extent or potential cost of any such obligations and liabilities. Failure to
determine adequately or at all the existence or extent or potential cost of any such obligations and liabilities
could, in the future, have a material adverse impact on the Company’s profitability, business prospects,
results of operations and financial condition.
First Nations
First Nations in Ontario are increasingly making land and rights claims in respect of existing and prospective
resource projects on lands asserted to be First Nation traditional lands. Should a First Nation make such a
claim in respect of Northern Gold’s properties and should such claim be resolved by government or the courts
in favour of the First Nation, it could materially adversely affect the business of Northern Gold. Since 2010,
Northern Gold has established a working relationship with the Wahgoshig First Nation, who are situated
north of the Garrison Gold Property. Northern Gold has kept the Wahgoshig First Nation informed of its
exploration activities and continues to use services the band provides and also employs band members on a
regular basis. At a meeting held in January 2012, Northern Gold and the Wahgoshig First Nation decided that
given the current state of exploration on the Garrison Gold Property, the parties have agreed to begin
negotiations on an Impact Benefits Agreement.
Northern Gold is committed to working in partnership with its local communities and First Nations in a
manner which fosters active participation and mutual respect. Northern Gold will continue to work towards
minimizing negative project impacts, encouraging certain joint consultation processes, addressing certain
decision making processes and towards maintaining meaningful ongoing dialogue for the Company. Many of
Northern Gold’s preferred contractors and suppliers live and work in the local communities. The Company
regularly consults with communities proximal to Northern Gold’s exploration activities to advise them of
plans and answer any questions they may have about current and future activities. The objective is to operate
to the benefit of the Company’s shareholders and the local communities using the resources and the
environment today without compromising the long-term capacity to support post exploration and ultimately
post mining land uses. Despite the foregoing, there can be no assurances that issues related to First Nations
communities or interests will not arise.
Acquisition of Additional Mineral Properties
There is no assurance that the Company will be able to acquire, or acquire interests in, other mineral
properties of merit, whether by way of option or otherwise.
Insurance Risk
The Company’s business is subject to a number of risks and hazards generally, including adverse
environmental conditions, industrial accidents, labour disputes or slowdowns, unusual or unexpected
geological conditions, ground or stope failures, changes in the regulatory environment or laws, and natural
phenomena such as inclement weather conditions, floods and earthquakes. Such occurrences could result in
damage to mineral properties or production facilities, personal injury or death, environmental damage to the
Company’s properties or the properties of others, delays in development, monetary losses and possible legal
liability.
Although the Company maintains insurance to protect against certain risks in such amounts as it considers
reasonable, its insurance will not cover all potential risks associated with its operations. The Company may
also be unable to maintain insurance to cover these risks at economically feasible premiums. Insurance
coverage may not continue to be available or may not be adequate to cover any resulting liability. Moreover,
insurance against risks such as environmental pollution or other hazards as a result of exploration and
production is not generally available to the Company or to other companies in the mining industry on
acceptable terms. The Company might also become subject to liability for pollution or other hazards which
may not be insured against or which the Company may elect not to insure against because of premium costs
14
or other reasons. Losses from these events may cause the Company to incur significant costs that could have a
material adverse effect upon its financial performance and results of operations.
Litigation Risk
All industries, including the mining industry, are subject to legal claims, with and without merit. Defense and
settlement costs of legal claims can be substantial, even with respect to claims that have no merit. Due to the
inherent uncertainty of the litigation process, the resolution of any particular legal proceeding to which the
Company may become subject could have a material effect on our financial position, results of operations or
the Company’s mining and project development operations.
Risks Relating to Statutory and Regulatory Compliance
The current and future operations of Northern Gold, including exploration, development activities and
commercial production, are and will be governed by laws and regulations governing mineral claims
acquisition, prospecting, development, mining, production, exports, taxes, labour standards, occupational
health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters.
Companies engaged in exploration activities and in the development and operation of mines and related
facilities generally experience increased costs and delays in production and other schedules as a result of the
need to comply with applicable laws, regulations and permits. Northern Gold has received all necessary
permits for the mining operations and the exploration and development work it is presently conducting, but
there can be no assurance that all permits, if any, which Northern Gold may require for future exploration,
construction of mining facilities and conduct of mining operations will be obtainable on reasonable terms or
on a timely basis, or that such laws and regulations would not have an adverse effect on any project which
Northern Gold may undertake.
Failure to comply with applicable laws, regulations and permits may result in enforcement actions
thereunder, including the forfeiture of claims, orders issued by regulatory or judicial authorities requiring
operations to cease or be curtailed, and may include corrective measures requiring capital expenditures,
installation of additional equipment or costly remedial actions. Northern Gold may be required to
compensate those suffering loss or damage by reason of its mineral exploration activities and may have civil
or criminal fines or penalties imposed for violations of such laws, regulations and permits. The Company is
not currently covered by any form of environmental liability insurance. See “Insurance Risk” above.
Existing and possible future laws, regulations and permits governing operations and activities of exploration
and development companies, or more stringent implementation thereof, could have a material adverse
impact on Northern Gold and cause increases in capital expenditures or require abandonment of, or delays in,
exploration.
Conflicts of Interest
Certain directors and officers of the Company are or may become associated with other natural resource
companies that may give rise to conflicts of interest. The directors and most of the officers of the Company
have either other full-time employment or other business or time restrictions placed on them and
accordingly, the Company will not be the only business enterprise of these directors and officers. For more
information, please see “Conflicts of Interest” on page 45 of this AIF.
Mineral Projects
Unless otherwise stated, the technical information in this section in respect of the Garrison Gold Property is
derived from the “Technical Report on the Garrison Gold Property” dated June 1, 2012 (the “Technical Report”)
prepared by Patrick Hannon, P.Eng. , Doug Roy, P.Eng., and Ian D. Trinder, P.Eng. of A.C.A. Howe International
Limited (“ACA Howe”). The authors of the Technical Report are “qualified persons” and are independent of
the Company within the meaning of NI 43-101.
15
The Technical Report has been filed with the Canadian securities regulatory authorities pursuant to NI 43101 and is available for review on the System for Electronic Document Analysis and Retrieval (“SEDAR”)
database at www.sedar.com.
This information as well as the other technical information contained herein has been reviewed by Michael P.
Gross, B.Sc. (Hons.), P.Geo., a “qualified person” for the purposes of NI 43-101.
Garrison Gold Property
Description and Location
The Company’s 100% owned Garrison Gold Property is comprised of 43 patented mining claims covering an
area of 476.1ha. The Garrison Gold Property contains two advanced stage exploration projects identified as
the Jonpol Deposit and the Garrcon Deposit in Garrison Township. Located in northeastern Ontario near the
historic mining camps of Timmins, Kirkland Lake and Rouyn-Noranda, Quebec, the Garrison Gold Property is
situated on the Destor-Porcupine Fault and is hosted within the Abitibi Greenstone Belt, one of the most
prolific gold producing shears in the world. The claims that make up the Garrison Gold Property have been
historically grouped in to four contiguous claim blocks known as the Newfield, Garrcon, Brydges and Linton.
Figure 1 - Garrison Gold Project Location in the Abitibi Greenstone Belt
Accessibility, Climate, Local Resources, Infrastructure and Physiography
The Garrison Gold Property is located approximately 40 kilometres north of Kirkland Lake, 40 kilometres
east of Matheson, and 100 kilometres east of Timmins, Ontario. The City of Timmins is a major mining centre
with an educated work force, a commercial airport and rail service. Direct highway access from Toronto is via
Highways 400 and 11 (approximately 560 km) then east from Matheson along Highway 101. Highway 101
runs parallel to the north side of the Garrison Gold Property, and an 800 metre long gravel road allows for 2wheel drive access from the highway.
16
There are a number of operating mines in the area resulting in established infrastructure and locally available
skilled labour. The recently acquired Plato Claim Group and Sims Claim Group are strategically located close
to the Garrison Gold Property and provide adequate surface area for processing operations and the disposal
of mine waste and tailings.
This area of northeastern Ontario has a cold continental climate. The daily average winter temperature in
January is -17 degrees Celsius and the daily average summer temperature in July is +18 degrees Celsius, with
average annual rainfall of approximately 590 millimetres largely during the months of April to October and
average annual snowfall of up to 300+ centimetres. In the winter, the region can see up to 3 metres of snow
accumulation, occurring largely between the months of November and April.
Exploration activities can be carried out year round, however certain exploration activities such as
geophysical surveys and diamond drilling are more easily conducted in the winter due to better accessibility
after freeze-up.
The Garrison Gold Property area is for the most part flat, with elevation ranges from 289 to 305 metres above
sea level with swamp and overburden covered areas between hummocks of clay rimmed outcrop. Jack pine
and balsam grow on sandy soil areas, while wet areas are vegetated with spruce, cedar and tag alder.
A 115kV power transmission line of unknown capacity is located approximately 10 km southeast of the
property along Highway 672 and water is readily available in the vicinity of the Garrison Gold Property. The
Garrison Gold Property and adjacent Northern Gold Plato claim holdings may be of sufficient area for the
establishment of potential mine infrastructure such as tailings and waste storage areas, heap leach pads and
processing plant site. More detailed site engineering is required to confirm the suitability and sufficiency of
the current property area for final mine and processing facilities should they be constructed.
Existing site infrastructure on the Garrison Gold Property includes a security gatehouse, a renovated core
shack with logging room and attached core sampling room, and a three room field office trailer.
Figure 2 – Garrison Gold Property Patented Claim Groups
17
History
Exploration conducted on the Garrison Gold Property dates back to 1935. Initial exploration work included
both surface and underground diamond drilling, a 256 foot (78 meter) deep shaft and completed a total of
4,294 meters of underground development work on two levels and included 3,144 meters of drilling in 31
drill holes. The underground exploration work was stopped at the end of 1937 with small sporadic drill
programs until the early 1980’s. The most important historic data relating to the Garrison Gold Property is
the exploration work completed since 1985 by Jonpol Explorations Ltd. (“Jonpol Explorations”) (and its
partners Cominco Ltd. (“Cominco”), Lac Minerals Ltd. (“Lac Minerals”) and Hillsborough Resources Limited
(“Hillsborough”), ValGold and Northern Gold. Northern Gold’s current drill hole database includes only holes
drilled between 1985 and present. The majority of work has concentrated on the Jonpol deposit and Garrcon
deposit areas within the Garrison Gold Property.
In 1985, the current Property was acquired by Jonpol Explorations. From 1985 to 1992, Jonpol Explorations
and its partners completed 80,604 metres of surface diamond drilling in 300 holes. Reserve estimates
generated by Jonpol Explorations cited 351,000 short tonnes at an average grade of 0.191 on the Garrcon
Deposit and 997,500 short tonnes at an average grade of 0.235 on the Jonpol Deposit.
In October 1995, Jonpol Explorations optioned the Linton and Brydges claim groups to Moneta Porcupine
Mines Inc. The exploration program was joint ventured with Alto Minerals Inc., who conducted
lithogeochemical sampling, mapping and real section IP geophysics to assess gold-bearing sulphide zones in
this sector of the property. The joint venture completed 10.7 line km of real section IP on lines 100 m apart
over the claims, and tested selected anomalous sections with four diamond drill holes totaling 1,080 metres
(3,544 ft.).
On July 26, 1996, Jonpol Explorations Ltd. signed an agreement with Hillsborough whereby Hillsborough was
granted an option to carry out an advanced exploration bulk sample program at the JP Zone (see Figure 3).
Hillsborough mined 54,000 short tonnes of mineralized material that was subsequently shipped to a custom
mill and smelter for processing. The average millfeed grade was 0.1955 opt and 9,476 oz au were recovered.
With 1,100 oz au lost to tailings, recovery for the project was 89.6%. The Hillsborough option agreement was
terminated in 1997.
ValGold Resources Inc. secured 100% ownership of the Garrison Gold Property’s Newfield, Garrcon and
Brydges claim groups in June 2005. Initial work consisted of data review and preliminary data compilation as
part of the planning process for a diamond drilling program.
In September 2009 Northern Gold entered into an Option Agreement with ValGold covering the Garrison Gold
Property (historic Newfield, Garrcon and Brydges claim blocks). Between September 2009 – December 2009,
Northern Gold conducted 2,330 m in 11 holes. In 2010, 11,178 m in 47 holes was completed.
Under the terms of an agreement announced on April 7th 2011, Northern Gold purchased ValGold’s 100%
interest in the Garrison Gold property comprised of 35 patented mining claims (historic Newfield, Garrcon
and Brydges claim blocks) with TSX Venture approval of the transaction granted on April 14, 2011. The 35
patented mining claims are subject to a 2% NSR royalty in favor of ValGold. The Company can purchase a
50% reduction in the NSR, reducing it to 1%, for $5,000,000 and elimination of the remaining 1% for a
further payment of $10,000,000 within defined time frames (Press Release Dated May 16, 2011). In addition,
12 of the 35 patented claims acquired, known as the Garrcon Group are subject to a prior NSR, of 1.5% of net
smelter returns from ores mined above 400 feet (122 meters) vertically and a 2% NSR from ores mined
below that elevation. Any royalties paid under the prior NSR will be deducted from any royalties owed under
the subordinate 2% NSR in favor of ValGold.
On April 12, 2011 Northern Gold announced that it reached a definitive agreement with June Linton, Lynn
Troke and Karen Wickett to acquire a 96.4% interest in the Linton Claim Group which has now been
incorporated into the Garrison Gold property.
During 2011, the Company completed 42,632 m of drilling in 122 holes.
On April 30, 2012, Northern Gold purchased the remaining 3.6% interest in the Linton Claim Group (two
sevenths (or 28.6%) interest in claim 26074) from Carol Linton Whelpdale.
18
Figure 3 – Garrison Gold Property and Nearby Land Holdings
Geological Setting
The Garrison Gold Property is located within the Abitibi sub-province (Abitibi Greenstone Belt [“AGB”]) of the
Archean age Superior Province of the Canadian Shield. The sedimentary and volcanic rocks are divided into
tectonostratigraphic units call assemblages for descriptive purposes. The Kidd-Munro assemblage of mafic
and ultramafic volcanics and the Timiskaming sedimentary rocks are variously intruded by sills and dikes of
various types but are primarily lamprophyres and syenites. The Garrison Gold Property is uniquely situated
astride both the Destor-Porcupine and Munro Faults, both major crustal breaks. The Destor –Porcupine Fault
is a major crustal break (deformation zone) that extends over a distance of more than 360 kilometers from
east of Val d’Or, Quebec to west of Timmins, Ontario. Other major faults, including the Larder Lake-Cadillac
Break and the Munro Fault occur as splays off the Destor-Porcupine Fault. Gold mineralization within the
AGB is structurally controlled and exceeds 200 million ounces over the last 110 years (over 70% of total
Canadian gold production). That production has come from deposits located on the Destor-Porcupine Fault,
major splays such as the Larder Lake-Cadillac Break or spatially related to the Destor-Porcupine Fault.
The Garrison Gold Property is oriented in an east-west direction and is uniquely situated astride both the
Destor-Porcupine and Munro Faults just west of where the Munro splays westerly off the north side of the
Destor-Porcupine Fault. The long dimension of the Garrison Gold Property is oriented east-west and has a
strike length of nearly four (4) kilometers. The north-south width of the property varies from 0.8 kilometers
at its narrowest point to nearly two (2) kilometers at its widest (Figure 2). St Andrew Goldfields Holt
McDermott and Harker-Holloway mines are located about 15 kilometers to the east and Brigus Gold’s Black
Fox mine is located about 30 kilometers to the west.
19
Figure 4: - Geology Near and Underlying the Garrison Gold Property
Property Geology
The rocks underlying the Garrison Gold Property are the Kidd-Munro Assemblage metavolcanic rocks which
are unconformably overlain by Timiskaming Assemblage metasedimentary rocks, composed of conglomerate,
wacke-sandstone, siltstone, argillite and schist. The Timiskaming Assemblage rocks are closely associated
with the Destor- Porcupine System for approximately 65 kilometers from the Quebec border on the east to
Hislop Township on the west.
The Garrcon Deposit is hosted in silicified Tismiskaming metasediments adjacent to the north side of the
Destor-Porcupine. Repeated fault movements along both the Destor-Porcupine and the Munro Faults created
a complex system of small stockwork type openings that enabled multiple pulses of mineralizing fluids to
flow into the host environment and deposit gold mineralization. The multiple openings do not have a
preferred orientation and indicate repeated movement such that veins with different orientations will offset
each other in different parts of the deposit. The result is a complex system of stockwork veining that has been
created over a width averaging 300 meters and known strike length of 1,225 meters. Mineralization
exceeding 1.5 g/t is known to extend to 650 meters and remains open.
The Jonpol Deposit is a zone of gold mineralization hosted in structurally controlled alteration zones within
mafic to ultramafic rocks along the north contact of the Munro Fault. The Munro Fault is a shear zone that
varies in width from 30 to over 100 meters. The four (4) zones making up the Jonpol Deposit have a
combined strike length of 1,600 meters. Gold mineralization is reported from drill holes that reach to a
vertical depth of over 600 meters. The Jonpol gold mineralization is generally associated with pervasive
carbonate alteration with late stage silicification, sulphidization and sericitization giving the altered rock a
pale buff to pale purple-grey hue.
20
Figure 5 – Property map showing the location and distribution of the four zones of the Jonpol Deposit
and the location of the Garrcon Deposit within the claim boundary’s and their relationship with local
geology.
Garrcon Deposit
Exploration
Subsequent to the signing of the LOI with ValGold in 2009, the Company commenced a diamond drilling
program which began in October 2009. At completion, 2,333 meters of drilling was completed in 11 diamond
drill holes. Assay results confirmed the results reported by previous operators. The continuity of
mineralization from surface to 250 meters vertical was excellent, and the gold mineralized quartz stockwork
vein system was seen to occur over a strike length of 600 to 700 meters and a width of 250 to 300 meters,
open to depth and on strike. The continuity of mineralization to a depth of 250 meters made it reasonable to
infer that results from drill holes by previous operators reporting bulk mineable gold grades down to 500
meters was reliable information.
In March 2010, following receipt of the last assays from the 2009 drill program, the Company commenced a
revision of the historic databases for both the Garrcon and Jonpol deposits. The revision was implemented to
correct problems found in the historic databases. Northern Gold’s drill logs and historic data were consistent.
This work was completed in mid-summer 2010.
In April 2010, the Company retained Larder Lake Geophysics Ltd. to undertake a ground magnetometer
survey of the property. The survey report was delivered in May 2010 and covered approximately 40 line
kilometers over the 35 patented claims making up the Garrison Gold Property.
In May 2010 the Company retained ACA Howe to complete the first independent NI 43-101 compliant
resource estimate calculation for the Garrcon Deposit. This Technical Report was based on the 54 diamond
drill holes drilled by previous operators and the 11 drill holes completed by the Company in its 2009 drill
21
program. The new resource estimate, using a block cut-off grade of 0.5 g/t Au, estimated an indicated
resource containing 144,000 ounces of gold contained in 3.8 million tonnes at a grade of 1.2 g/t. Inferred
resources are reported at 530,000 ounces of gold contained in 18.5 million tonnes at a grade of 0.9 g/t. This
first Garrcon mineral resource estimate was announced in a September 23, 2010 press release with complete
details contained in the NI43-101 Technical Report filed on SEDAR on November 5, 2010.
In May 2010, the Company initiated background environmental studies in preparation for permit
applications.
Also in May 2010, the Company initiated a surface prospecting program that obtained six selected surface
grab samples, some with visible gold, that returned assays from 4.53 g/t to 93.89 g/t from an area named the
1070 vein. A follow-up program mechanically stripped and washed over 5,000 square meters of bedrock.
The exposed rock is a hard, brittle, silicified, metasediment that is broken and fractured in multiple
orientations with quartz veins and vein-lets filling the multiple fractures and forming a stockwork vein
system. About 180 one-meter channel samples were cut using a diamond saw over the newly stripped area
and a smaller area stripped by previous operators. Channel samples were cut in selected areas to test the
grade of (a) veins containing visible gold, (b) areas of strong alteration and quartz veining without visible
gold, and (c) areas where both quartz veining and alteration were weak, to see if any mineralizing trends or
patterns could be discerned that would help develop an improved model for gold mineralization.
In August, 2010 the Company staked two claims located on the Munro Fault which is the same structure that
hosts the Jonpol Deposit on the Garrison Property. The claims are located about two kilometers west of the
Garrison Gold Property and are named the Munro Group.
In late October 2010, with the addition of a second diamond drill, the Company implemented the first of
several systematic drill fences on the Garrcon Deposit. These fences start at Section Line 11+50 W and
continue to the east on 50 meter line spacing as recommended by ACA Howe in the Garrcon Deposit Technical
Report posted on SEDAR November 5, 2010. At March 31, 2012 these fences had been extended 1,100 meters
to the east, reaching Section Line 0+50 W.
In November 2010, Northern Gold engaged SGS Canada Inc. to complete scoping level gold recovery testwork
on two samples of gold mineralized material from the Garrcon Deposit. The testwork was completed
February 1, 2011. The composite drill core samples submitted were Sample A from the Shaft Zone and
Sample B from the North zone. The samples were tested to see how gold mineralized material from the two
Zones responded to different gold recovery flowsheets. The only apparent difference was in flotation
recovery and that difference does not appear to be material because there appear to be better recovery
alternatives than bulk flotation. The test work evaluated gravity concentration, flotation and cyanidation
recovery techniques. SGS Canada Inc. concluded that the best recovery techniques for the Garrcon
mineralization were either gravity plus cyanidation or whole ore cyanidation.
In December 2010 the Company retained ACA Howe to complete an updated resource estimate using the drill
holes completed in the 2010 drilling program. ACA Howe would also commissioned to complete a
Preliminary Economic Assessment (“PEA”) based on the resources contained in the updated estimate. All of
the 2010 drill holes plus seven (7) of the 2011 drill holes were included in the estimate bringing the total
number of drill holes to 119. On June 23, 2011 the updated NI 43-101 resource estimate was completed by
ACA Howe and announced in a news release of that same date. The updated resource estimate contained
Indicated resources of 720,000 ozs Au in 24,9 million tonnes at a grade of 0.9 g/t plus Inferred resources of
430,000 ozs Au in 18.6 million tonnes at a grade of 0.7 g/t. The PEA, using a gold price of $1,200 per oz
indicated an eight year mine life, a cash operating cost of $494 per ounce, nearly $50 million in annual cash
flow and an IRR of 47%. Complete details of this work was posted on SEDAR August 8, 2011.
At year end 2010 the Company had completed 11,178 m of drilling in 47 holes completed during its 2010 drill
program which began in May 2010.
Diamond drilling continued without interruption from 2010 into 2011 and by year end, 42,632 meters of
drilling was completed in 122 drill holes. Major Drilling continued with one of the drilling contractors with
two drill rigs working all year. In August, a second drill contractor, Asinii Drilling, was contracted to bring
two (2) more drill rigs on the property effectively doubling drilling capacity.
22
In February and March 2011 an Induced Polarization Geophysical Survey was conducted over the Garrison
Gold Property. The survey was completed by Peter E. Walcott & Associates Limited of Vancouver, B.C. The
purpose of the survey was to attempt to define areas of chareability and resistivity responses that correlate
favorably with those same responses in areas known to contain gold mineralization. The survey was
completed using pole-dipole system using a 50 meter dipole spacing. Lines were run on 200 meter spacing
and about 34 line kilometers were surveyed. Areas of resistivity were identified and are targeted for future
drilling. Analysis of regional aeromagnetic surveys in conjunction with the resistivity results identified a
number of potential structures that may be important to the localization of gold mineralization. These areas
are being worked into the ongoing diamond drilling.
In May 2011, following a test phase the Company entered into an agreement with Phototonic Knowledge
(“PK”) of Rosemere, Quebec to employ their proprietary Core MAPPER™ hyperspectral imaging technology to
enhance the determination of mineral and metal content for a faster and more consistent identification of
alteration suites and lithology. Core MAPPER’s™ hyperspectral imaging process is a new application of
technology originally developed in the 1960s for remote sensing from aircraft and satellites that captures and
analyzes information from across the electromagnetic spectrum. Much as the human eye sees light in three
bands (red, green and blue), spectral imaging divides the spectrum into many more bands and Core
MAPPER™ adapts this technology for use at the drill core scale with significantly higher resolution. The
wavelength differences of absorbed and reflected light shone onto the core samples is analyzed in hundreds
of very narrow bands down to a resolution of two nanometers, or two billionths of a meter of the visible and
near infrared light spectrum. This technological application has a spatial precision of one square millimeter.
Processing of the information identifies characteristic patterns for minerals, rock types and alteration types
that can be mapped and displayed graphically in a variety of ways, in two or three dimensions, to guide
additional drilling, model the deposits, target assaying zones within the core and generally speed up
interpretation of results and add value by providing new insights into the geometry of the Garrcon Deposit
with this and other data collected in the Company’s mineral exploration program.
Diamond drilling continued without interruption from 2011 into 2012. At March 31, 2012 another 20,780
meters of drilling in 36 holes has been completed.
In January 2012, Northern Gold retained ACA Howe to update Property resources by completing another
updated resource estimate for the Garrcon Estimate. On June 23, 2011 an updated NI 43-101 resource
estimate was completed by ACA Howe. The Technical Report posted to SEDAR August 8, 2011 also contains
the same PEA from the June 23, 2011 Technical Report. The reader is cautioned that the PEA is based on the
June 23, 2011 resource estimate and should not be interpreted to indicate anything about the April 19, 2012
resource estimate.
Subsequent to March 31, 2012 there were 9,427 meters of drilling completed in 19 drill holes and 6 drill hole
extensions as of June 30, 2012.
The cumulative results of all the Company’s exploration work summarized above is best illustrated by
estimated resources reported in the current NI 43-101 Technical Report posted on SEDAR June 1, 2012.
Since Northern Gold began work on the property in September 2009, estimated resources at the Garrcon
Deposit have increased from zero to 1.27 million ozs Au Measured and Indicated resources contained in 38.5
million tonnes at a grade of 1.03 g/t plus 0.37 million ozs Au Inferred resources contained in 15.8 million
tonnes at a grade of 0.72 g/t. These results indicate the Northern Gold’s exploration programs are soundly
based and yielding successful results.
Mineralization
The Garrcon Zone exploration target includes the historic Shaft, South and North Zones. It occurs within the
Timiskaming Assemblage adjacent to the north side of the Destor-Porcupine fault and is a zone of brecciated,
silicified metasediment with weakly disseminated sulphides (pyrite) and irregular quartz veinlets.
Gold mineralization is hosted in metasedimentary rock sequences that include greywacke, arkose and iron
formation, occurring adjacent to the Destor-Porcupine Fault Zone. These metasedimentary sequences have
been hydrothermally altered and mineralized in distinct zones persisting to depth. Native gold grains and
gold-bearing sulphide mineralization occur in quartz-carbonate vein stockworks and locally is disseminated
in the wall rocks. Principal minerals are native gold, pyrite (less than 1%), magnetite, specularite, and
23
pyrrhotite with subordinate chalcopyrite, sphalerite, galena and arsenopyrite. Gangue minerals are vein
quartz and carbonate (calcite, dolomite, and ankerite). Pervasive wall rock alteration is common adjacent to
the veins, usually consisting of carbonatisation (ankerite or ferroan dolomite) and minor sulphides (pyrite
and pyrrhotite).
Gold mineralization has been found at surface in numerous locations within the Garrcon deposit, creating
multiple targets for future exploration. The Garrcon Deposit and its resource calculation are most recently
detailed in the NI 43-101 Technical Report posted on SEDAR on June 1, 2012 as having bulk mineable
potential.
Typical Mineralized Intersections
The following table contains examples of mineralized intersections in a sampling of drill holes from the areas
of the Measured and Indicated resources completed by the Company since drilling commenced in October
2009.
Table 1 – Examples of Mineralized Intersections from the Garrcon Deposit
Drill Hole #
Includes
GAR-09-04
From
(meters)
To
(meters)
Downhole
Interval*
(meters)
Au grade
(g/t)
76.5
179.0
102.5
1.38
147.0
179.0
32.0
2.25
GAR-09-07
4.4
14.0
9.6
2.22
GAR-09-09
103.0
132.0
29.0
4.90
GAR-10-23
117.0
218.0
101.0
1.07
203.0
218.0
15.0
1.64
211.0
269.0
58.0
1.08
254.0
269.0
15.0
2.78
134.0
242.0
108.0
2.33
134.0
185.0
51.0
3.21
216.0
311.0
95.0
1.30
256.0
287.0
22.0
3.69
198.0
300.0
102.0
1.00
276.0
294.0
18.0
4.35
136.0
272.0
136.0
0.515
256.0
272.0
16.0
1.28
195.0
337.0
142.0
1.14
247.0
256.0
9.0
2.87
312.0
320.0
8.0
9.40
327.0
423.3
96.3
0.80
335.0
351.0
16.0
2.12
88.0
145.0
57.0
0.62
137.0
145.0
8.0
1.46
27.0
453.0
426.0
0.51
Includes
166.0
183.0
17.0
1.69
Includes
296.0
299.0
3.0
4.36
Includes
324.0
343.0
19.0
1.18
Includes
Includes
GAR-10-36
Includes
GAR-10-42
Includes
GAR-10-50
Includes
GAR-10-59
Includes
GAR-11-63
Includes
GAR-11-70
Includes
GAR-11-81
Includes
GAR-11-97
Includes
GAR-11-111
24
Drill Hole #
Includes
GAR-11-116
Includes
GAR-11-122
Includes
From
(meters)
To
(meters)
Downhole
Interval*
(meters)
Au grade
(g/t)
345.0
392.0
47.0
1.05
345.0
355.0
10.0
1.92
294.0
354.0
60.0
0.78
307.0
326.0
19.0
1.62
GAR-11-130
20.0
74.0
54.0
1.19
GAR-11-132
272.0
302.0
30.0
1.38
GAR-11-148
8.0
56.0
48.0
1.94
52.0
56.0
4.0
4.87
GAR-11-151
420.0
421.0
1.0
9.58
GAR-11-154
380.0
406.0
26.0
1.13
GAR-11-161
87.0
141.0
54.0
0.79
107.0
121.0
14.0
1.34
146.0
216.0
70.0
0.54
211.0
216.0
5.0
1.04
253.5
254.0
0.5
29.43
316.0
318.0
2.0
14.83
53.0
54.0
1.0
21.95
302.0
422.0
120.0
0.59
Includes
319.0
330.0
11.0
1.72
Includes
362.0
385.0
23.0
1.63
175.0
186.0
11.0
0.98
175.0
177.0
2.0
2.15
10.65
76.0
65.4
0.54
10.65
23.0
12.4
1.32
Includes
Includes
GAR-11-170
Includes
GAR-11-171
GAR-11-194
Includes
GAR-12-204
Includes
140.0
240.0
100.0
1.32
Includes
170.0
196.0
26.0
2.65
Includes
180.0
191.0
11.0
3.13
517.0
628.0
111.0
1.54
Includes
544.0
579.0
35.0
3.29
Includes
544.0
552.0
8.0
5.65
Includes
591.0
602.0
11.0
1.24
*True widths are not known because mineralization occurs as multi-directional stockwork veining;
therefore, all assay intervals are downhole intervals and not true widths.
Drilling
Diamond drilling at the Garrcon Deposit has been ongoing, sporadically, since the 1930s, both from surface
and underground during the three year underground exploration program conducted by Cominco during the
mid-1930s. As discussed above under the heading “History,” drilling by Cominco, Jonpol Exploration and Lac
Minerals completed 39 drill holes. Valgold completed another 15 drill holes in 2006 and 2007.
25
Since starting its first diamond drill program in October 2009, the Company has completed three (3) annual
drill programs as follows:
2009
2,333 meters in 11 drill holes.
2010
11,178 meters in 47 drill holes.
2011
42,632 meters in 122 drill holes.
st
2012 to March 31
20,780 meters in 36 drill holes.
Total drilling when combined with the NI 43-101 compliant historic drilling is 91,480 meters in 270 drill
holes.
All of Northern Gold’s drilling has been NQ size drill core to increase the sample size over BQ size core and
improve assay results.
While Northern Gold’s drill programs have evolved and continue to evolve, the primary objective has always
been to define enough Measured and Indicated resources to enable a production decision to be made at the
earliest possible time. In order to accomplish that, objectives for each annual drill program incorporate the
results of the previous drilling and adds additional objectives.
The focus of the 2009 program was to confirm the historic drill results, and to use two or three holes to test
the apparent strike extension to the east. This work was completed with one diamond drill.
The primary focus of the 2010 program was to infill and decrease hole spacing in the area between Section
Lines 11+75 W and 13+00 W in order to increase the quality of the resources in that area above a vertical
elevation of 250 meters. That work commenced with the start of drilling in May 2010 with one drill. The
secondary focus of this was to begin stepout drilling using drill fences spaced 50 meters apart. That work
commenced in October 2010 with the addition of a second diamond drill. Stepout drill holes on 50 meter
fences were completed both to the east starting at 11+50 W and to the west starting at 13+50 W.
The 2011 program continued with the same focus as the 2010 program. However, when some stepout drill
holes encountered mineralized rock at their originally planned depth, the program was modified to explore to
vertical depths down to 400 meters and then later to 500 meters vertical based on mineralized intersections
where drill holes were deepened beyond planned depths. By the last quarter of calendar 2011, the program
was modified again based on results to include drilling holes through the near barren ultramafic rocks on the
north side of the Garrcon Deposit to explore for extensions of mineralization in a new mineralized zone
identified in drill hole GAR-11-171 and named the Green Zone. In conjunction with Green Zone exploration
near the west end of the resource footprint, drill holes were extended northerly to explore the Jonpol East
Zone and to infill the widely spaced historic drilling in the Jonpol East Zone.
The 2012 program is focused on those same objectives - first, to continue infilling within the resource
footprint to increase the quality and quantity of resources; second, continue stepping out along strike on the
Garrcon Deposit to the east and west to increase the quantity of resources; third, to continue to explore and
delineate the Green Zone to increase the quantity of resources; fourth, to infill and explore the Jonpol East
Zone and the area between the Garrcon and Jonpol East Deposits where Northern Gold has now recognized
that additional gold mineralization, in both metasediments and ultramafice rocks, exists but it is too early in
the exploration of this mineralization to draw any conclusions about its possible extent or significance; and,
fifth, to look at the opportunity to develop additional drill targets at depth similar to the 111 meters
averaging 1.5 g/t and bottoming at 628 meters vertical in hole GAR-12-204.
Sampling, Analysis, Data Verification and Security of Samples
Quality Assurance/Quality Control (“QA/QC”) protocols are in place for all its exploration and development
drilling. ACA Howe has reviewed these procedures in detail for three NI 43-101 compliant Technical Reports
and has concluded that It is the opinion of ACA Howe that all potential gold mineralized zones in the
Company’s drill core have been sampled and that the sample preparation, security and analytical procedures
implemented have been adequate for the exploration conducted to date by Northern Gold. Northern Gold has
implemented a QA/QC protocol as summarized below.
At the Garrison Gold Property, Northern Gold is conducting exploration for additional gold mineralization
outside those areas containing NI 43-101 compliant gold resources, as well as the development and
26
expansion of gold mineralization in all resource categories within areas containing NI 43-101 compliant gold
resources. At the Garrison Gold Property industry standard QA/QC protocols were implemented with the
start of Northern Gold’s drilling on the Garrison Gold Property in October 2009. Since then, from time to
time, improvements and adaptations have been implemented to improve the overall effectiveness of those
protocols.
Sample Security
Sample security and chain of custody starts with the removal of core from the core tube and boxing of drill
core at each drill. The boxed core remains under the custody of the drillers until it is transported from the
drill to the secure Core Shack facility by either the drill contractor or one of the Company’s designated
personnel. At the Core Shack core boxes are opened and inspected to ensure correct boxing and labeling of
the core by the drill contractors then re-closed. The core is stored securely at the company’s core processing
facility until it is moved into the Core Shack for processing.
Data Compilation
Processing of the core starts with the calculation and recording of the percent core recovered and the Rock
Quality Designation (“RQD”), followed by a quick lithologic log as a reference check for comparison with the
Photonic Knowledge (“PK”) lithology using hyperspectral imaging (please see “Exploration” for more details)
Next the core is photographed with a high-resolution camera, capturing RAW digital images that will later be
converted to either a JPEG or TIFF formatted image. This high-resolution photography produces a digital
image with a resolution between 20 and 25 mega-pixels, assuring images of sufficient quality to enable relogging on a monitor at larger than life size. Three boxes of core are photographed at the same time, first
photographing the core on one side and then rotating the core 180 degrees for a second image. The core is
then securely stored on site and placed in the queue for hyperspectral imaging. Hyperspectral imaging
provides a detailed analysis and false-colour image of the various hydrothermal alteration types known to be
associated with gold mineralization in the Garrcon Deposit. PK includes QA/QC imaging checks in every scan
completed.
Following the PK hyperspectral imaging, the core is marked and tagged for sampling and splitting. Sample
lengths are normally one meter, unless there is a geological reason to shorten the sample interval. Core
marked for splitting is split using a diamond core saw with a mounted jig to assure the core is split equally.
One-half of the core is sent to an analytical laboratory for analysis. The remaining one-half of the core is
retained and incorporated into the on-site core library for any metallurgical test work that may be required in
the future. Duplicate samples are taken every 20th sample, each with its own unique sample number in order
that all of Northern Gold’s duplicates are blind to the analytical laboratory. Duplicates alternate between pulp
duplicates and core duplicates. Pulp duplicates are obtained by taking a second 300-gram riffle split from the
crushed core, resulting in two 300-gram pulps from each sample interval selected for pulp duplicate analysis.
Thirty-gram samples from each 300-gram pulp are assayed separately. Core duplicates are obtained by
taking all of the remaining core from the selected sample interval and having it processed identically to the
normal half-core samples. While using both core halves from the selected sample intervals does not leave any
core in that interval for reference purposes, this procedure results in improved correlation between duplicate
core samples as compared to using quarter-core duplicates, as was the previous practice.
In addition to duplicates, Northern Gold inserts blank samples and certified gold standard samples at a rate of
5% of each sample type. Normally, four different gold standards are used and are randomly selected prior to
insertion into the sample stream.
Analysis
More than 99% of the drill core is submitted to a certified analysis laboratory for assaying. The core not
submitted for analysis is collected (retained) for hand samples, petrographic samples and ARD analysis or for
such other technical needs as they arise from time to time.
The process described above is standard procedure for all exploration drilling conducted outside of the
resource footprint, defined by ACA Howe in their independent NI 43-101 Technical Report filed on SEDAR
August 8, 2011. Within that resource footprint, whole core analysis is utilized in preference to half-core
analysis. The benefits of and rationale for implementing whole core analysis include:
27
1.
It is statistically proven that a larger sample size results in more reliable analyses,
particularly in gold deposits.
2.
More reliable analyses yield a higher confidence level in the resource estimation.
3.
The successful implementation of PK’s hyperspectral imaging process produces far more and
better lithology and alteration data than can be obtained by conventional core logging,
reducing the need to retain half of the split core as a reference source.
4.
The current physical core library within the ACA Howe resource footprint contains nearly
200 drill holes, which Northern Gold believes is more than adequate for any future needs.
5.
The drill core photographic record is of sufficient quality to provide answers to any question
that may arise regarding the lithology, alteration, or mineralization.
Chain of Custody protocols require the signing and maintenance of tracking logs and receipts when samples
are shipped from the Garrison Gold Property, and when they are picked up from analysis laboratories and
delivered to another laboratory or returned to the Garrison Gold Property. When utilizing commercial
transportation to ship from the Garrison Gold Property, all shipping sacks are sealed with a numbered tag, the
removal of which is recorded upon receipt by the receiving analytical laboratory.
The Company utilizes the services of two analytical laboratories for assaying. One laboratory is Expert
Laboratories (“Expert”), an accredited laboratory (PTP-MAL – Accredited by Standards Council of Canada – in
full accord with ISO/IEC Guide 43-1 "Proficiency Testing by Interlaboratory Comparison”) in Rouyn-Noranda,
Quebec. The second laboratory is SGS Canada Inc. (“SGS”) a certified laboratory (ISO/IEC 17025), in Toronto,
Ontario.
Northern Gold utilizes the services of both laboratories for primary gold analyses. Both laboratories follow
nearly identical procedures in fire assaying for gold as is described in more detail below. All remaining half
core not submitted for assay is stored at the Garrison Gold Property and included in the current core library
for reference and any future testwork. Following completion of assaying, all unused crusher rejects and pulps
are returned to the Garrison Gold Property for dry and secure long term storage.
All sample intervals where visible gold, or a mineral that is believed to be visible gold, is observed are
submitted for lead fire assaying using the metallic screen procedure followed by a gravimetric finish at both
Expert and SGS. When using this procedure, the entire sample is pulverized and screened through a 100mesh screen. The screen oversize is lead fire assayed in total, while the screen undersize is mixed and three
duplicate 30 gram samples are lead fire assayed using a gravimetric finish.
Fire assay analytical procedures for gold at Expert are as follows:
1.
The total sample submitted is crushed to 90% passing 10 mesh (2.0 mm).
2.
A 300 gram sub-sample is riffle split and pulverized to 90% passing 200 mesh (75 micron).
3.
A 30-gram pulp sample is lead fire assayed with an ICP (inductively coupled plasma) geochemical
finish with a lower detection limit of 0.005 g/t.
4.
10% of all samples are assayed in duplicate and one blank and one standard are included in every 28
samples.
5.
All samples that assay greater than 3 g/t are re-assayed using another 30-gram sample with a
gravimetric finish.
Following completion of fire assaying Expert packages up all remaining pulps and ships the pulps to the SGS
laboratory in Toronto for CN (cyanide) soluble assaying and geochemical analyses. Coarse rejects are
returned to the Project site for dry and secure storage.
Fire assay analytical procedures for gold at SGS for are as follows:
1.
The total sample submitted is crushed to 75% passing 10 mesh (2.0 mm).
2.
A 250 gram sub-sample is riffle split and pulverized to 85% passing 200 mesh (75 micron).
28
3.
A 30-gram pulp sample is lead fire assayed with an ICP geochemical finish with a lower detection
limit of 0.005 g/t.
4.
10% of all samples are assayed in duplicate and one blank and one standard are included in every 28
samples.
5.
All samples that assay greater than 3 g/t are re-assayed using another 30 gram sample and given a
gravimetric finish.
All CN soluble and geochemical analyses are completed at the SGS laboratory in Toronto. CN soluble analyses
are completed as follows:
1.
All drill samples submitted for fire assay at either Expert or SGS are re-assayed at SGS using a 1% hot
cyanide solution and shaken for an hour followed by decantation with an AAS (atomic absorption
spectroscopy) finish.
All multi-element geochemical analyses are completed at the SGS laboratory in Toronto. These analyses are
completed as follows:
1.
All drill samples submitted for fire assay at either Expert or SGS are analyzed at SGS for a 32-element
suite of minerals.
2.
The multi-element analysis is conducted using 4-acid digestion and finished using ICP and OES
(optical emission spectroscopy) analyses.
Data Verification
Northern Gold completes check analyses of gold assays at a rate of approximately 5% of all samples
submitted for gold analysis. Expert analyses are checked at SGS and SGS analyses are checked at Expert.
When multiple drills are being used, each drill is assigned a series of 10 sequential numbers with which to
designate drill holes. This ensures that hole locations and core boxes are properly marked and identified.
When a drill completes 10 holes, that drill is assigned another 10 sequential numbers. This means that drill
results will not be disclosed in numerical order.
Core recovery is generally very good in the Garrison Gold Property area and ACA Howe is confident that there
are no sampling or recovery factors that would negatively impact the sampling procedures.
Overall, sampling methods are to industry standards for mineralization of this type. ACA Howe notes that
while Northern Gold’s current practice of whole core sampling within the Garrcon resource shell may not be
considered an industry standard it is reasonable given the benefits and rationale of whole-core sampling of
gold mineralization with a nugget effect such as that at Garrcon. ACA Howe is of the opinion that whole core
sampling is appropriate within the current resource “footprint” given that approximately 200 archived holes
are available for this area and Northern Gold’s implementation of protocols such as high resolution digital
photography, secure onsite archiving of coarse sample rejects, and state-of-the-art hyperspectral core
imaging. ACA Howe recommends Northern Gold continue to half-core sample when testing the margins of the
Garrcon resource and beyond where drill hole density is low, understanding of the lithology, alteration and
mineralization is limited, and a sufficient core archive has yet to be established. ACA Howe is of the opinion
that the sampling methods meet NI 43-101 standards.
It is the opinion of ACA Howe that all potential gold mineralized zones in the Company’s drill core have been
sampled and that the sample preparation, security and analytical procedures implemented have been
adequate for the exploration conducted to date by Northern Gold. Northern Gold has implemented a quality
assurance and quality control (QA/QC) protocol as detailed above.
ACA Howe has reviewed the Garrcon Deposit data provided by Northern Gold, including the drilling database,
has visited the site, and has reviewed sampling procedures and security. ACA Howe believes that the data
presented by the Company are generally an accurate and reasonable representation of the Garrcon Deposit
mineralization. Northern Gold’s QA/QC results to date indicate that there are no major problems with the
accuracy of the analyses. The current sampling and analytical protocols are considered by ACA Howe to be
appropriate.
29
Metallurgical Testing
The Company contracted with SGS Canada Inc. to conduct preliminary metallurgical testwork on Garrcon
Deposit samples at their research facility in Lakefield, Ontario.
The testwork was conducted on two 50 kilogram samples of gold mineralized material, identified as Sample A
(Shaft Zone) and Sample B (North Zone), from the Garrcon Deposit located on the Garrison Gold Property to
investigate the recovery of gold at a scoping study level.
The average calculated gold head assay from the testwork for the two samples was 1.06 g/t for Sample A and
1.73 g/t for Sample B. The sulphur content of the two samples was 0.56% for Sample A and 0.25% for Sample
B. The samples were also submitted for Bond ball mill grindability (BWI) and abrasion index (AI) tests. Both
samples were characterized as hard to very hard with Bond Work Index values of 21.9 and 21.6 kWh/t
respectively. The samples also fell into the abrasive range with abrasion indices of 1.161 and 0.878.
The test program included a number of standard gold processing options including; gravity separation,
flotation and cyanidation. Gravity separation tests yielded gold recoveries of approximately 32% and 30%
for Samples A and B respectively.
Sample A gravity tailing and whole ore flotation testwork achieved gold recoveries of approximately 94%
independent of the grind size which was varied from ~131 micron to ~45 micron. Sample B gravity tailing
flotation testwork did not achieve as high recoveries with values ranging from approximately 81% to 89%.
There was also a direct correlation between increased gold recovery and finer grind size shown in the Sample
B gravity tailing flotation testwork.
Cyanidation test results on gravity tailings and whole ore were excellent for both samples. Gold recoveries
ranged from approximately 94% to 97% in the tests conducted on the gravity tailings and approximately
93% to 98% for the whole ore samples. Given the degree of gravity recoverable gold, inclusion of a gravity
circuit within the process flowsheet is recommended even though the whole ore cyanidation results were
comparable to gravity tailings results. Single carbon-in-leach tests were performed on both samples and
there was no indication of preg-robbing.
Cyanidation tests were also conducted on the flotation concentration to evaluate the effect of regrinding. The
gold recoveries did increase when the flotation concentrate was reground prior to leaching. Overall gold
recoveries by flotation and concentrate cyanidation for Samples A and B were lower than the other test
options with gold recoveries of 92% and 86%, respectively.
Results from this study indicated that the process flowsheet should focus on gravity separation and gravity
tailing cyanidation. Further testwork to optimize the design parameters is required so that an optimum
process flowsheet can be developed. Flotation conditions and parameters would need to bestudied further in
order to increase flotation recovery to include this type of processing in the flowsheet.
Figures 6 and 7 summarize the test results for Sample A and Sample B respectively.
30
Figure 6 - Summary of Metallurgical Test Results for Sample A
Figure 7 - Summary of Metallurgical Test Results for Sample B
31
Mineral Resource and Mineral Reserves Estimate for Garrcon Deposit
During January-March 2012, ACA Howe carried out a mineral resource estimate update to its 2011 mineral
resource estimate for the Garrcon Deposit at the Garrcon Gold Deposit. This resource estimate, completed in
accordance to NI 43-101 requirements, includes holes up to Hole GAR-11-180, drilled during December 2011.
The updated resource estimate was prepared by Doug Roy, M.A.Sc., P.Eng., Associate Mining Engineer with
ACA Howe. Geological interpretation was provided by Ian Trinder, M.Sc., P.Geo., Senior Geologist with ACA
Howe. Micromine software (Version 2011) was used to facilitate the resource estimating process. The
resource estimate was prepared in accordance with CIM Definition Standards for Mineral Resources and
Mineral Reserves.
The chosen cut-off grade for mineralized zone interpretation was 0.1 g/t of gold. The chosen “block cut-off” 2
grade for defining mineral resources was 0.3 g/t. No top-cut grade was used.
Resource classification parameters were chosen based on a combination of variography results and the
author’s judgment. Inferred, Indicated, and Measured mineral resources were identified.
Table 2 – Summary of Non-Diluted Mineral Resource Estimate by Category
Mineral Resource
Category
Measured
Less Than 200 m Deep
More Than 200 m Deep
Total Measured
Block CutOff Grade
(g/t)
Tonnes Above
Cut-Off
Average Gold
Grade
(g/t)
Ounces
0.3
0.3
0.3
16,400,000
1,240,000
17,640,000
1.04
1.41
1.06
548,000
56,000
604,000
Indicated
Less Than 200 m Deep
More Than 200 m Deep
Total Indicated
0.3
0.3
0.3
9,230,000
11,600,000
20,830,000
0.92
1.06
1.00
274,000
394,000
668,000
Total Measured
And Incicated
0.3
38,470,000
1.03
1,272,000
Inferred
Less Than 200 m Deep
More Than 200 m Deep
Total Inferred
0.3
0.3
0.3
4,450,000
11,330,000
15,780,000
0.67
0.75
0.72
95,000
272,000
367,000
Notes on Mineral Resource Estimate:
1. Cut-off grade for mineralized zone interpretation was 0.1 g/t.
2. Block cut-off grade for defining Mineral Resources was 0.3 g/t.
3. No top-cut grade was used.
4. Gold price was $US 1,500 per troy ounce.
5. Zones extended up to 100 metres down-dip from the last intercept. Along strike, zones extended halfway to the
next cross-section.
6. Minimum width was five metres, though in no place was the zone that narrow.
7. Non-diluted.
8. No mineral reserves were identified. Mineral resources that are not mineral reserves do not have demonstrated
economic viability.
9. Resource estimate prepared by Doug Roy, M.A.Sc., P.Eng., ACA Howe.
10. A specific gravity (bulk density) value of 2.79 was applied to all blocks - a representative value based on 1,174
measurements.
11. Ordinary block kriging ("OBK") was used for estimating block grades.
12. Measured mineral resources were defined where three holes were used to estimate block grades and the
average distance to samples was 25 metres or less. Indicated mineral resources were defined where three holes
32
were used to estimate block grades and the average distance to samples was 40 metres or less (based on
variography).
13. The volume/tonnes of historical underground exploration workings have not been subtracted from this mineral
resource estimate - the amount would not be significant compared with the volume/tonnes of mineral resource
This updated resource estimate has increased Garrcon Deposit NI 43-101 Measured and Indicated resources
from zero at the time Northern began work on the property in 2009 to 1.272 million today. This was
accomplished over 27 months with the drilling of 56,140 meters of drilling in 180 holes. When the
Company’s recent drilling is combined with the historic drilling, each drill hole has developed approximately
7,100 ounces.
Preliminary Economic Assessment Study
The latest NI 43-101 Technical Report filed on SEDAR June 1, 2012 contains a PEA Study extracted from the
2011 updated resource estimate posted on SEDAR August 8, 2011. This PEA is based on the 2011 updated
resource with an effective date of June 23, 2011. All data, interpretations, mining & milling plans and its
economic assessment are derived from the 2011 resource estimate and should not be used to interpret
anything about the most recent NI 43-101 Technical Report.
This PEA is preliminary in nature, includes inferred mineral resources that are considered too speculative
geologically to have the economic considerations applied to them that would enable them to be categorized as
mineral reserves, and there is no certainty that the preliminary economic assessment will be realized. Mineral
resources that are not mineral reserves do not have demonstrated economic viability.
A mining schedule and economic model was been developed for the operation. The PEA indicates that the
mining of the Garrcon gold deposit by open pit mining methods would be feasible today (June 23, 2011). This
PEA has determined that, with the Mineral Resources outlined to date, a combination gravity agitated leach
plant and a heap leach facility would be economic with a base case net present value (5.0% discount rate) of
$266 million and an internal rate of return of 47%. PEA conditions included $1,200/troy ounce gold, a
processing rate of about 11,300 tonnes per day and a heap leach facility processing about 2.3 million tonnes
per year.
The project is most sensitive to grade and the price of gold and least sensitive to capital costs. The PEA has
been completed using order of magnitude costs and rock quality values typical of northern Ontario. The
project economics would be even better if the present price of gold ($1500 +) were used; however, at this
stage the project is still 3 to 5 years from production and it is prudent to use a lower number. As the project
advances, a gold price closer to the then present price can be used. Based on the mineral resource update and
PEA, ACA Howe concludes that the Garrcon Deposit and the Garrison Gold Property is a property of merit and
warrants additional expenditures to be further developed.
The following table summarizes the PEA conclusions.
Table 3: - PEA Financial Indicators
Net Present Value @ 5% Discount
$266,000,000
Cumulative Cash Flow
$394,000,000
Taxes Payable
$120,000,000
IRR – Internal Rate of Return
47%
Payback from start of production is just under 2 years
$494 – average operating cost per ounce
$154 – required capital cost per ounce
$648 Total Cost Per Ounce
Troy Ounces of Gold Produced = Just Over 1,000,000 ozs
NOTE: For PEA – 50% of ounces are Inferred resources
PEA – EBITDA Margin 58%
33
Figure 6: - Conceptual Pit Design with 2012 Block Model and Jonpol East Drill Holes
Exploration Plans
1.
Based on recommendations by ACA Howe, the following work plans are currently part of or will be
incorporated into Northern Gold’s work plans for ongoing project exploration and mine
development. Continue the advanced exploration permitting currently in progress to be followed by
the work necessary for operational permitting.
2.
Expand the permitting process to include potential mill sites, heap leach pads and tailings
management areas using claims recently acquired by Northern.
3.
Continue and expand the current drilling program:
a. Continue the Garrcon infill drilling program to improve the quality of existing resources.
b. Emphasis should also be placed on step out drilling beyond the current Garrcon resource
footprint to:
i. test for potential mineralization in meta-sediments between the current Garrcon
resource mineralization shell and the Munro Fault Zone/Jonpol East Zone to the
north;
ii. test geophysical anomalies defined by the 2011 IP survey and;
iii. continue to test beneath meta-sediment outcrops and newly stripped metasediments hosting stockwork veining with anomalous gold mineralization.
4.
Northern Gold should continue specific gravity measurements of representative samples. Sufficient
samples should be tested to be representative of the various mineralized and non-mineralized rock
types within the Garrcon Zone along its entire strike length, width and depth. The number of samples
will depend on the statistical variance of the measurements.
34
5.
Several of the resource blocks that used the higher grade samples during the latest estimated
resource update be drill-targeted to verify the estimated grades.
6.
Further mineral processing work should be carried out to support assumptions that were made in
the PEA. The work that has been carried out thus far is quite preliminary. This work should be
expanded by exploring various processing options, determining which options would best suit this
particular deposit and optimizing the most promising flowsheet. Should that flowsheet consider heap
leaching, a bulk sample pilot trial should be carried out to determine the actual, realized processing
recovery value as opposed to the laboratory-predicted value. Testwork should include:
a. Sieve analysis vs. gold grade.
i. For each stage of the rock breakage history, a sieve analysis and grade of gold
should be determined. This should be completed for selected bulk sampling sites
where at least several hundred tonnes can be blasted on surface. At each stage of
crushing, the ore should be sieved and a gold grade determined for each size
fraction.
b. Bottle roll tests to give some indication of the leaching character of the rock.
c. Column leaching tests should be completed to get some idea of percolation rates for the
heaps.
d. Determination of solution application rates and solution percolation rates, crushing and
agglomeration testing.
7.
Continue testing the deposit for any potential Acid Rock Drainage (ARD) and confirmation of the
relatively high calcium content, which is expected to neutralize any ARD potential.
8.
A study of the structural geology, a map of the jointing system and a report on the geotechnical
properties of the potential pit should be completed. The geotechnical properties of the rock types at
the Garrcon property (Uniaxial Compressive Strength (UCS), Tensile Strength, Young’s modulus and
Poisson’s ratio) should be determined. A suite of samples representing different parts of the deposit
and each rock type should be tested at a rock mechanics laboratory.
9.
Additional land may be required around the deposit, to store waste rock and tailings facilities. More
detailed site engineering is required to confirm the suitability and sufficiency of the current property
area for final mine and processing facilities should they be constructed.
10. Approximately 20 kilometres of line will be required to bring 3 phase power to the site. A right of
way for this line should be investigated and talks with Ontario Hydro should be initiated.
11. A hydrological study should be completed to determine the amount of water that must be pumped to
keep the pit dry. Any water bearing fractures found should be mapped so that they can be grouted off
if necessary. A water storage facility will have to be in place to supply mill water, heap leach water as
well as fire-fighting water.
12. A rock penetration rate study should be undertaken in order to determine the penetration rate for
down the hole hammer type blast hole drills. Drill manufacturers often offer this service. A variety of
core or rock samples should be tested so that an accurate penetration rate can be determined.
13. Update the Garrcon resource estimate to include the results of the ongoing 2012 drill program. The
update should be completed after sufficient drilling has been completed along strike of the currently
defined mineral resource.
Jonpol Deposit
A discussion of Property History and Geologic setting was presented in the section “Garrison Gold Property –
Description and Location”, above.
Exploration
Through September 2011, the Company’s work on the Jonpol Deposit was quite limited. ACA Howe was
retained to complete a NI 43-101 compliant resource estimate resulting in a Technical Report posted on
SEDAR October 23, 2009. The database for all four Jonpol Zones was reviewed, recompiled and updated to
35
correct minor errors and to the extent possible, make all historic data consistent with the Company’s usage.
Historical data was reviewed and evaluated for possible re-opening of the underground workings and for
possible drill targets. Previous grid systems were converted to the Company’s new grid and all surveys and
drill hole data was revised to reflect the new grid coordinates. Re-boxing and re-labeling historic drill core is
ongoing as is organizing and cataloging pulps and rejects from the ValGold drilling and securing those pulps
and rejects in secure, water tight storage facilities.
Following completion of the June 23, 2011 updated Garrcon Deposit resource estimate and the accompanying
PEA which included a conceptual pit design it became apparent that at least part of the Jonpol East Zone
mineralized area would probably be incorporated in the pit for the Garrcon Deposit simply because of pit
slope to ensure stable ground for mining in the pit.
A review of Jonpol East Zone mineralization revealed that historic drilling in the Zone was too widely spaced
to enable intelligent decisions and conclusions to be reached regarding the potential of the zone to contribute
economic support to the Garrcon pit. In addition, more mineralization was found in metasediment and
ultramafic rocks that lie between the Jonpol East Zone and the Garrcon Deposit.
Commencing in October 2011, relogging and assaying of all unassayed sections of the historic Jonpol East
Zone core began. In addition, several of Northern Gold’s drill holes that were stopped after leaving the
Garrcon mineralization were re-entered and deepened to test the Jonpol East Zone and the intervening rocks.
Encouraging assay results caused the planning and drilling of more drill holes to infill data on the Jonpol East
and the intervening rocks. That work is continuing as of March 31, 2012.
Re-logging and re-assaying of the historic Jonpol East Zone drill holes was completed during the first calendar
quarter of 2012 and the work was shifted to encompass the other three Jonpol Zones. In June 2012, Northern
Gold expanded its geological staff in order to assign three geologists to the work. Northern Gold estimates
that there remains 80,000 meters of core to re-log which includes approximately 50,000 meters of unassayed core.
Mineralization
The Jonpol Deposit is described in detail in a Technical Report posted on SEDAR October 20, 2009. The
Jonpol Deposit has been traced over a strike length 1.5 kilometers and is hosted in the mafic and ultramafic
sheared system of rocks known as the Munro Fault. The Jonpol Deposit is a zone of gold mineralization
hosted in structurally controlled alteration zones within mafic to ultramafic (tholeitic to komatitic) rocks
along the north contact of the Munro Fault which crosses the north-central part of the Garrison Gold
Property. The Jonpol gold mineralization is generally associated with pervasive carbonate alteration with late
stage silicification, sulphidization (pyrite and arsenopyrite) and sericitization, giving the altered rock a pale
buff to pale purple-grey hue. The deposit is interpreted to be a typical Destor-Porcupine style, narrow vein
deposit with the potential to exist much deeper than the plus 600 meter depth to which it has already been
traced.
36
Table 4 – Examples of Typical Mineralized Intersections in the Jonpol Zones Selected From over 400
Drill Holes.
Downhole
Horizontal
From
To
Interval
(True) Width
Gold Grade
Drill Hole #
(meters)
(meters)
(meters)
(meters)
(g/t)
86-12
119.50
120.60
1.10
0.71
52.45
87-30
190.20
193.55
3.35
2.16
1.22
0.00
4.88
4.88
4.87
12.32
155.00
161.00
6.00
4.28
3.82
C06-05B
18.00
21.00
3.00
1.92
7.54
G06-10
403.00
404.00
1.00
0.71
5.97
G06-25
581.00
585.00
4.00
2.29
10.51
GAR-33
191.44
202.7
11.25
7.95
13.17
GAR-48
618.80
629.35
10.55
6.78
3.19
GAR-66
369.11
373.99
4.88
3.13
7.66
GE85-4
117.05
118.30
1.25
0.62
32.09
GD86-9
60.66
67.36
6.71
4.74
1.35
GE-88-08
317.91
331.01
13.11
8.42
6.33
N-87-17
153.92
158.19
4.27
1.87
16.17
N-88-109
104.24
112.47
8.23
5.29
5.67
N-88-127
60.35
71.93
11.58
8.19
4.32
N-88-137
156.67
160.02
3.35
2.20
12.14
N-88-55
99.36
109.73
10.36
5.18
11.71
N-88-74
211.53
217.93
6.4
3.2
11.32
N88-89A
183.79
186.23
2.44
1.22
9.41
N-89-145
152.25
158.5
6.25
2.64
6.63
B-10
C06-02
37
Drilling
At March 31, 2012 the Company had completed 2,680 meters of drilling into the East Zone. This drilling was
accomplished by re-entering holes Garrcon drill holes and extending them to the Jonpol East Zone.
Sampling, Analysis, Data Verification and Security of Samples
Sampling, analysis, data verification and sample security follows the same protocols discussed under the
Garrcon Deposit.
Metallurgical Testwork
From 1989 through 1995, metallurgical testwork was conducted five (5) times at four different test facilities.
Following is a chronological listing of the work and conclusions.
In 1989, Lac Minerals had samples tested at Lakefield Research (now SGS Canada Inc.) in Lakefield, Ontario.
Lakefield reported that gold recoveries in the flotation concentrates, at a primary grind of 81% minus 200
mesh, were 93% in 25% of the weight at 18 g/t Au and 90% in 13% of the weight at 32 g/t Au with one
cleaning stage. Gold dissolution from the cleaner concentrate by cyanidation was 54% of the gold in the ore.
Pressure oxidation of the concentrate prior to cyanide leaching increased gold extraction to 87.5% of the gold
in the ore.
In 1990, Jonpol Explorations had additional samples tested at Lakefield Research (now SGS Canada Inc.) in
Lakefield, Ontario. Results confirmed that approximately 50% of the gold in the samples was recoverable by
cyanidation. Flotation tests collected 95% of the gold in the rougher circuit. At the fourth cleaner circuit gold
recovery had decreased to 72% at a grade of 200 g/t in the concentrate.
In early 1991, Jonpol Explorations submitted a concentrate sample to Genmin in Johannesburg, South Africa
for bio-oxidation testing. Genmin reported that 99% sulphur oxidation was achieved after 15 days of
treatment. Gold recovery improved from approximately 50% before bio-oxidation to 99% following
treatment. The Jonpol sample was net acid consuming which would increase treatment costs. It was
concluded that the Jonpol sample was highly amenable to Genmin’s BIOX® process.
Later in 1991, Jonpol Explorations submitted a 1,000 ton (short tons) bulk sample to Norandsa Inc. at their
Horne Division in Rouyn-Noranda, Quebec. The sample was first processed through the concentrator facility
at the smelter, achieving a flotation concentrate containing 91.5% of the gold in the feed at a concentration
ratio of 15:1 or a grade of 2.62 ozs Au/t. The concentrate was successfully treated in the smelter. It was
noted that arsenic, at 3.41%, was the only metal in the ore that would be considered deleterious.
In 1994, Jonpol Explorations retained EHA Engineering Ltd. (“EHA”) of Richmond Hill, Ontario to review
previous metallurgical testwork and to conduct additional testwork. EHA concluded that flotation recovery
in the rougher circuit should be about 93%. Cyanidation of that concentrate yielded about 54% recovery and
treatment of the concentrate with ferric sulphate only increased cyanidation Au recoveries to about 58%.
Mineral Resource and Mineral Reserves Estimate
Estimated Au resources for the four Jonpol Mineralized Zones can be found in the ACA Howe 43-101
Technical Report issued October 7, 2009 and posted to SEDAR October 20, 2009. This resource estimate was
review and re-issued by ACA Howe in the 43-101 Technical Reported dated April 19, 2012 and posted on
SEDAR June 1, 2012. The following table presents the Jonpol Zones estimated resources.
38
Table 5: 2009 Jonpol Deposit Mineral Resource Estimate
Indicated Resource
Zone
Tonnes
JP Zone
236,100
Au
(g/t)
7.69
Inferred Resource
Ounces
Au
Tonnes
58,380
JD Zone
Au
(g/t)
Ounces
Au
812,400
4.66
121,750
168,000
7.37
39,830
RP Zone
12,100
10.91
4,260
124,300
5.05
20,170
East Zone
4,900
3.58
560
451,000
4.47
64,790
Totals
253,100
7.77
63,200
1,555,700
4.93
246,540
Notes on Jonpol Mineral Resource Estimate:
1. Resource estimate prepared by Peter T. George, P.Geo., Associate, ACA Howe International Limited.
2. The Qualified Person for the Jonpol Mineral Resource estimate as reported in this Report is Mr. Ian Trinder,
M.Sc., P.Geo.
3. Cut-off grade for mineralized zone interpretation was approximately 0.5 g/tonne.
4. No top-cut grade was used.
5. A specific gravity (bulk density) value of 2.8 was applied to all zones.
6. Mineral resources were estimated using the polygonal longitudinal section method.
7. Indicated mineral resources were permitted a 15 metre radius of influence around a drill hole pierce-point or
half the distance to the adjacent drill hole pierce-point whichever the lesser. Inferred mineral resources were
permitted a 25 metre radius of influence around a drill hole pierce-point or half the distance to the adjacent drill
hole pierce-point whichever the lesser.
8. Resource is non-diluted.
9. No mineral reserves were identified. Mineral resources that are not mineral reserves do not have demonstrated
economic viability.
10. The tonnes extracted from historical underground exploration and bulk sample development workings have not
been subtracted from this mineral resource estimate
Exploration Plans
Exploration plans for the Jonpol Deposit is planned to proceed as follows but may be changed to reflect new
discoveries and data.
1.
Continue with the re-boxing and re-labeling of historic core.
2.
Continue with the program of re-logging all the historic core with a dedicated crew. There remains
an estimated 80,000 meters of core to re-log at March 31, 2012.
3.
Continue the program of re-assaying all un-assayed portion of Jonpol historic core. An estimated
50,000 meters of un-assayed core remains to be assayed.
4.
Continue the program of infill drilling in the Jonpol East Zone and systematically extend that drilling
to the west as drill availability permits.
a. This work includes exploration and infill for Au mineralization found in the metasediments,
mafic and ultramafic volcanics between the Garrcon Deposit and the Jonpol Deposit.
5.
Continue modifying the geologic interpretation of the Jonpol Deposit to determine if there is
potential to include a portion or portions of the Jonpol Deposit in open pit mining plans for the
property.
6.
ACA Howe recommends that prior to completion of any potential future mineral resource update of
the Jonpol Deposit, the Company compile all available production records, level plans and mill and
smelter records from the historic underground work completed in 1990 and 1996-1997 in an
attempt to accurately determine volumes, tonnages and grades of extracted mineralization and bulk
sampling data. This information, should be incorporated into any future resource update. Use of 3-D
modeling software should be considered to accurately locate the underground sublevels with respect
to the surface drill holes. Selection of cut-off grade and top-cut should be re-examined and
determined on the basis of gold price and economics at that future date.
39
Estimated Mineral Resources Summarized for the Garrison Gold Property
The total estimated mineral resources for both the Garrcon Deposit and the Jonpol Deposit follows in Table 6.
Table 6: - Total Mineral Resource for the Garrison Gold Property
Resource
Au Grade
Category
Tonnes
(g/tonne)
Ounces Au
Garrcon Deposit
Measured (2012)
17,640,000
1.06
604,000
Garrcon Deposit
Indicated (2012)
20,830,000
1.00
668,000
Jonpol Deposit
Indicated (2012)
253,100
7.77
63,200
Total Indicated
21,083,000
1.08
731,000
Measured + Indicated
38,723,100
1.07
1,335,000
Garrcon Deposit
Inferred (2012)
15,780,000
0.72
367,000
Jonpol Deposit
Inferred (2012)
1,555,800
4.93
246,540
Total Inferred
17,336,000
1.09
614,000
Total
Notes on Mineral Resource Estimate:
1. Columns may not total correctly due to rounding
2. Garrcon mineral resources:
3. Block cut-off grade for defining Mineral Resources was 0.3 g/tonne.
4. Ordinary block kriging ("OBK") was used for estimating block grades.
5. Jonpol mineral resources:
6. Cut-off grade for mineralized zone interpretation was approximately 0.5 g/tonne.
7. Mineral resources were estimated using the polygonal longitudinal section method.
Dividend Policy
There are no restrictions in the Company’s constating documents that would restrict or prevent the Company
from paying dividends. However, it is not contemplated that any dividends will be paid on the Company’s
common shares (“Common Shares”) in the foreseeable future, as it is anticipated that all available funds will
be reinvested in the Company to finance the growth of its business. Any decision to pay dividends on
Common Shares in the future will be made by the board of directors on the basis of the earnings, financial
requirements and other conditions existing at such time and will be subject to any restrictions imposed by
the terms of any debt facilities or other contractual obligations of the Company.
Share Capital
The Company is authorized to issue an unlimited number of Common Shares and an unlimited number of
special voting shares issuable in series.
There are 155,947,910 Common Shares issued and outstanding at the date of this AIF. Each Common Share
entitles the holder to receive notice of any meetings of shareholders of the Company, to attend and to cast one
vote per Common Share at all such meetings. Holders of Common Shares do not have cumulative voting rights
40
with respect to the election of directors and, accordingly, holders of a majority of the Common Shares entitled
to vote in any election of directors may elect all directors standing for election. Holders of Common Shares
are entitled to receive on a pro-rata basis such dividends, if any, as and when declared by the board of
directors at its discretion from funds legally available therefore and, upon the liquidation, dissolution or
winding up of the Company, are entitled to receive on a pro-rata basis the net assets of the Company after
payment of debts and other liabilities, in each case subject to the rights, privileges, restrictions and conditions
attaching to any other series or class of shares ranking in priority to, or equally with, the holders of Common
Shares with respect to liquidation, dissolution or winding up. The Common Shares do not carry any preemptive, subscription, redemption or conversion rights, nor do they contain any sinking or purchase fund
provisions.
Market for Securities
The Common Shares are listed and posted for trading on the TSX-V under the symbol “NGM”. The following
tables set out the market price range and trading volumes for the periods indicated.
Common Shares
High
($)
Low
($)
Avg Daily
Volume
April 2011
0.59
0.55
704,857
May 2011
0.48
0.44
434,061
June 2011
0.44
0.40
288,031
July 2011
0.38
0.35
162,330
August 2011
0.39
0.36
437,500
September 2011
0.40
0.38
165,033
October 2011
0.30
0.27
116,580
November 2011
0.25
0.24
146,600
December 2011
0.23
0.22
199,660
January 2012
0.21
0.19
497,345
February 2012
0.30
0.27
334,025
March 2012
0.27
0.25
133,163
Directors and Officers
The following table sets forth the name, municipality of residence, position held with the Company and
principal occupation of each person who is a director and/or an executive officer of the Company.
41
Name and Municipality of Residence
Position with the
Company
Principal
Occupation
Date of
Appointment
Martin Robert Shefsky(4)
Thornhill, Ontario, Canada
President, Chief
President and Chief Executive
Executive Officer, and Officer of the Company since 2006
Director
May 1, 2006
Eric Michael Moeller(1)(2)(3)(4)(5)
Buckhorn, Ontario, Canada
Director
Principal of Nanoparticle
Consultancy LC
May 1, 2006
Dennis Howson Waddington(1)(2)(3)(5)
Toronto, Ontario, Canada
Director
Proprietor of
Waddington Consulting
July 6, 2007
James C. Gervais, LGen (Ret’d) (1)(2)(3)(5)
Ottawa, Ontario, Canada
Chairman and
Director
Chairman and Director Northern
July 16, 2008
Gold Mining Inc; Chairman and
Director of Commissionaires Ottawa
a private NFP security firm; Director
of Sama Resources Inc an
international mineral exploration
company
Nuno Brandolini (3)
New York, New York, USA
Director
General partner, Scorpion Capital
Partners, L.P
January 17, 2012
Gregory Gibson(4)
Massey, Ontario, Canada
Director
President and CEO, Trelawney
Mining and Exploration Inc. (March
2009 – June 2012); Senior Project
Manager of Marathon Drilling since
October 2007; Project Manager of
Procon Mining from May 2007 to
October 2007; President of Hi-Tech
Drilling from 1999 to May 2007.
June 11, 2012
Eric Edward Victor Szustak
Oakville, Ontario, Canada
Michael Philip Gross
Vancouver, British Columbia, Canada
Heather Anne Laxton
Stouffville, Ontario, Canada
(1)
(2)
(3)
(4)
(5)
Chief Financial Officer Self-employed financial consultant
Vice President,
Exploration of the
Company
December 15, 2007
Self-employed mining and geological July 9, 2010
consultant
Chief Governance
Chief Governance Officer and
May 2, 2011
Officer and Corporate Corporate Secretary of the Company
Secretary
(May 2011 to present); Manager
Corporate Governance, European
Goldfields Limited (May 2008 – May
2011); Manager Corporate
Governance, High River Gold Mines
Ltd. (March 2006 – May 2008)
Member of the Audit Committee
Member of the Compensation Committee
Member of the Nominating and Corporate Governance Committee
Member of the Health, Safety and Environment Committee
Member of the Special Committee
42
Additional biographical information regarding the directors and executive officers of the Company is
provided as follows:
Martin R. Shefsky: Mr. Shefsky is a senior executive with over 25 years of experience in leading existing and
start-up companies conducting business in Canada and the United States. He has been involved in
development, sales and marketing across a wide variety of commercial ventures including investment capital,
exploration of natural resources, healthcare technology, health and safety products, financial consulting, stock
trading and portfolio management. From 1997 to 2005, Mr. Shefsky was the founder and director of Regis
Resources Inc., an existing operating business which was formed to develop an industrial mineral deposit of
vermiculite utilized by industry as a building material and heat-resistant insulation. Mr. Shefsky received a
B.A. in Political Science & Psychology from Pepperdine University in Malibu, California in 1983.
Eric M. Moeller: Mr. Moeller is a registered Professional Geologist (South Carolina SC374) with 35 years of
continuous service in mining (surface and underground), mineral exploration, operations management, and
domestic and international sales and marketing with an emphasis on industrial minerals. Mr. Moeller is
currently a director for the Vermiculite Association, UK. and is Principal of Nanoparticle Consultancy LLC, a
consulting firm specializing in all aspects of nano-scale silicates, as well as the development and management
of industrial mineral deposits on a global basis. Mr. Moeller obtained a B.Sc. in geology from the Mackay
School of Mines, University of Nevada in 1977.
Dennis H. Waddington: Mr. Waddington is a Professional Geoscientist registered with the Association of
Professional Geoscientists of Ontario (APGO). Mr. Waddington is the proprietor of Waddington Consulting, a
Toronto-based management and administrative services business specializing in the junior natural resource
sector, and in the past five years, has served as Chief Financial Officer for several junior exploration
companies. Prior to that, Mr. Waddington held a variety of exploration and management positions with larger
resource companies over a period of 30 years. Mr. Waddington holds Bachelor and Master of Science degrees
in Geology from the University of Toronto and a Master of Business Administration degree from the Schulich
School of Business, York University.
James C. Gervais, LGen (Ret’d): Jim Gervais graduated from The Royal Military College of Canada with a
BSc and later from The Royal Military College of Science, UK , with a Technical Staff Course. He spent over 30
years in the Canadian Forces in a variety of command and administrative assignments in Canada and
internationally. Among the most senior of these assignments were commands of a mechanized brigade group,
chief of personnel and senior appointments of the Canadian Forces and command of the Canadian Army.
Following his military career he spent 12 years as Assistant Deputy Minister at Government House
responsible for military advice and for managing Canada's Honours Programmes. He is currently Chairman of
Northern Gold Mining Inc, Chairman of Commissionaires Ottawa and a Director of Sama Resources.
Nuno Brandolini: Mr. Brandolini is a general partner of Scorpion Capital Partners, L.P., a private equity firm
based in New York, New York and organized as a small business investment company (SBIC). Prior to forming
Scorpion Capital and its predecessor firm, Scorpion Holdings, Inc., Mr. Brandolini served as Managing
Director of Rosecliff, Inc., a leveraged buyout fund co-founded by Mr. Brandolini in 1993. Prior to 1993, Mr.
Brandolini was a Vice-President in the investment banking department of Salomon Brothers, Inc., and a
Principal with the Batheus Group and Logic Capital, two venture capital firms. Mr. Brandolini began his career
as an investment banker with Lazard Freres & Co. Mr. Brandolini was awarded a law degree by the University
of Paris and received an M.B.A. from The Wharton School of the University of Pennsylvania. He currently
serves as a director of Cheniere Energy, Inc.
Gregory Gibson: Mr. Gibson was formerly President and Chief Executive Officer of Trelawney Mining and
Exploration Inc. Mr. Gibson has over 30 years of experience in the mining industry having worked as a mine
manager for gold and copper mines in Australia, a nickel mine in Timmins, Ontario and a gold mine in British
Columbia. Previously he has worked for JS Redpath, Dynatec Mining Ltd., Yilgarn Star Gold Mine, and Copper
Mines of Tasmania. Mr. Gibson currently serves as a director of Trelawney Mining and Exploration Inc.,
Portage Minerals Inc., Mag Copper Ltd., F.D.G. Mining Inc. and Temex Resources Corp.
Eric E. V. Szustak: Mr. Szustak is a Chartered Accountant with over 25 years of financial service, accounting,
and CFO experience. His background includes 14 years with three national brokerage firms in various
positions, including management and securities compliance. He holds the position of chief financial officer of
43
other junior resource companies through his work as a financial services consultant. Mr. Szustak holds a B.A.
Honors Chartered Accountant Studies and Economics from the University of Waterloo and received his
Chartered Accountant designation in 1985.
Michael P. Gross: Mr. Gross has more than 40 years of professional experience in all facets of mineral
exploration, mine development, mine operations, operations analysis, mine management and financial
modeling. During his career, he has designed and implemented exploration programs resulting in the
discovery and delination of resources that facilitated the successful growth of several mining and exploration
companies. He as previously worked for Freegold Ventures Ltd., Nayarit Gold Inc., Exall Resources Ltd. and
Atlas Corp. Mr. Gross has an Bachelor of Science in geology from the University of Wisconsin, Madison, and
holds a Masters’ degree in Economic Geology from the University of Arizona, and has been the recipient of
several awards for excellence in mining.
Heather A. Laxton: Ms. Laxton has 15 years of corporate governance, corporate secretarial and securities
regulation experience with a focus on the resource sector. She has served as corporate governance manager
and corporate secretary of several mining companies listed on the Toronto Stock Exchange, TSX Venture
Exchange, London–AIM and NYSE–AMEX, and is a member of the Canadian Society of Corporate Secretaries
and the Institute of Chartered Secretaries and Administrators.
Securities owned
Based on the disclosure available on the System for Electronic Disclosure by Insiders (SEDI) as of the date of
this AIF, the directors and executive officers of the Company, as a group, beneficially owned, directly or
indirectly, or exercised control or direction over, approximately 6,991,250 common shares, representing
approximately 3.97% of the total number of common shares outstanding.
Corporate Cease Trade Orders and Bankruptcies
To the Company’s knowledge, none of the directors or officers of the Company or a shareholder holding
sufficient securities of the Company who could materially affect the control of the Company, is, or has been
within the ten years before the date of this AIF, a director or officer of any other company that, while such
person was acting in that capacity, was the subject of a cease trade or similar order, or an order that denied
such company access to any statutory exemptions under Canadian securities legislation, for a period of more
than 30 consecutive days, or became bankrupt, made a proposal under any legislation relating to bankruptcy
or insolvency or was subject to or instituted any proceedings, arrangements or compromise with creditors or
had a receiver, receiver manager or trustee appointed to hold the assets of that company.
Penalties and Sanctions
Except as disclosed below, to the Company’s knowledge, none of the directors or officers of the Company or a
shareholder holding sufficient securities of the Company who could materially affect the control of the
Company, has been subject to any penalties or sanctions imposed by a court relating to Canadian securities
legislation or by a Canadian securities regulatory authority or has entered into a settlement agreement with a
Canadian securities regulatory authority or been subject to any other penalties or sanctions imposed by a
court, or regulatory body that would likely be considered important to a reasonable investor in making an
investment decision.
Pursuant to the application of the Company for the listing of the Company’s common shares on the TSX-V in
2007, a review of a previous settlement agreement between the Ontario Securities Commission and Martin
Shefsky (the “Review”) was undertaken by the TSX-V and disclosed in the Corporation’s Final Long Form
Prospectus dated November 8, 2007. The conclusion of the Review was that Mr. Shefsky could act as the
President, Chief Executive Officer and director of the Company, but he could not act as the Chairman nor be a
member of any committee of the board of directors of the Company nor a disclosure committee of the
Company in the future without the prior written approval of the TSX-V.
In October 2011 a subsequent review by the TSX-V resulted in the removal of the Review restrictions against
Mr. Shefsky.
44
Personal Bankruptcies
To the Company’s knowledge, none of the directors or officers of the Company or a shareholder holding
sufficient securities of the Company to affect materially the control of the Company, or a personal holding
company of any such persons has, within the ten years before the date of this Annual Information Form been
bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or been subject to or
instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager
or trustee appointed to hold the assets of the director or officer.
Conflicts of Interest
To the best of the Company’s knowledge, there are no known existing potential conflicts of interest among the
Company, its directors, officers or other members of management of the Company as a result of their outside
business interests as at the date hereof. However, certain of the directors and officers and other members of
management serve as directors, officers, and members of management of other public resource companies.
Accordingly, conflicts of interest may arise which could influence these persons in evaluating possible
acquisitions or in generally acting on behalf of the Company. If any conflict should arise, the conflicted
director or directors or officer must disclose in good faith his or their interests in such agreement or
transaction to the other directors not having a conflict of interest. Such other directors, if there be a sufficient
number of directors to form a quorum and carry the resolution without counting the votes of the interested
director(s) must vote in favour of the agreement or transaction for it to be approved. If all of the directors
have a conflict of interest, the agreement or transaction must be authorized, approved or ratified by a
resolution of shareholders in order to achieve statutory validity.
The directors and officers of the Company have been advised of their obligations to act at all times in good
faith in the interest of the Company and to disclose any conflicts to the Company if and when they arise.
Board Committees
The Board of Directors of the Company has four committees.
i.
The Audit Committee is comprised of Dennis H. Waddington (Chair), Eric M. Moeller and James C.
Gervais.
ii.
The Compensation Committee is comprised of James C. Gervais (Chair), Eric M. Moeller and Dennis H.
Waddington.
iii.
The Nominating and Corporate Governance Committee is comprised of James C. Gervais (Chair), Eric
M. Moeller, Dennis H. Waddington, and Nuno Brandolini.
iv.
The Special Committee is comprised of James C. Gervais (Chair), Eric M. Moeller and Dennis H.
Waddington.
Term
All of the Directors of the Company hold office until the close of the next annual meeting of the shareholders
of the Company or until their successors are duly elected or appointed.
Audit Committee
The Audit Committee is responsible for monitoring the Company’s systems and procedures for financial
reporting and internal control, reviewing certain public disclosure documents and monitoring the
performance and independence of the Company’s external auditors. The committee is also responsible for
reviewing the Company’s annual audited financial statements, unaudited quarterly financial statements and
management’s discussion and analysis of financial results of operations for both annual and interim financial
45
statements and review of related operations prior to their approval by the full board of directors of the
Company.
The Audit Committee has been structured to comply with National Instrument 52-110 — Audit Committees
(“Nl 52-110”) and is comprised of Dennis H. Waddington (Chair), Eric M. Moeller and James C. Gervais. Each
member of the Audit Committee is financially literate and independent within the meaning of NI 52-110.
Charter
The directors of the Company have adopted a Charter for the Audit Committee, which sets out the Audit
Committee’s mandate, organization, powers and responsibilities. The full text of the Audit Committee Charter
is attached hereto as Appendix “A” to this AIF.
Composition of the Audit Committee
The members of the Audit Committee are Dennis H. Waddington (Chairman), Eric M. Moeller and James C.
Gervais. Messrs. Waddington, Moeller and Gervais are independent (as defined in National Instrument 52-110
– Audit Committees (“NI 52-110”) adopted by the Canadian Securities Administrators), and all members are
financially literate (as defined in NI 52-110).
Name of Member
Dennis H. Waddington (Chairman)
Eric M. Moeller
James C. Gervais
Independent(1)
Yes
Yes
Yes
Financially Literate(2)
Yes
Yes
Yes
Notes:
(1) To be considered independent, a member of the Audit Committee must not have any direct or indirect
“material relationship” with the Company. A “material relationship” is a relationship which could, in the view of
the board of directors of the Company, be reasonably expected to interfere with the exercise of a member’s
independent judgment.
(2) To be considered financially literate, a member of the Committee must have the ability to read and understand
a set of financial statements that present a breadth and level of complexity of accounting issues that are
generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised
by the Company’s financial statements.
Audit Committee Oversight
At no time during the fiscal year ended March 31, 2012 have any recommendations by the Audit Committee
respecting the appointment and/or compensation of the external auditors of the Company not been adopted
by the board of directors of the Company.
Pre-Approval Policies and Procedures
The Audit Committee has adopted specific policies and procedures for the engagement of non-audit services
as described in its Charter.
Audit Fees
The following table discloses the fees billed to the Company by its external auditor during the last two
completed financial years:
46
Financial Year Ending
Audit Fees (1)
Audit Related Fees (2)
Tax Fees (3)
March 31, 2012
March 31, 2011
$33,500
$27,800
Nil
Nil
$3,500
$1,900
All Other Fees
(4)
Nil
Nil
Notes:
(1) The aggregate fees billed for professional services rendered by the auditor for the audit of the Company’s annual financial
statements.
(2) The aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or
review of the Company’s financial statements and are not disclosed in the “Audit Fees” column.
(3) The aggregate fees billed for tax compliance, tax advice, and tax planning services.
(4) No other fees were billed by the auditor of the Company other than those listed in the other columns.
Exemption
Since the Company is a “Venture Issuer” pursuant to NI 52-110 (its securities are not listed or quoted on any
of the Toronto Stock Exchange, a market in the United States of America, or a market outside of Canada and
the United States of America), it is exempt from the requirements of Part 3 (Composition of the Audit
Committee) and Part 5 (Reporting Obligations) of NI 52-110.
Promoter
No person or company has been, within the two most recently completed financial years, or is during the
current financial year, a promoter of Northern Gold.
Legal Proceedings
The Company is not subject to any legal proceedings material to the Company to which the Company or any of
its subsidiaries is a party or of which any of the Company’s properties is the subject matter and no such
proceedings are known to the Company to be contemplated.
Interest of Management and Others in Material Transactions
None of the directors or officers of the Company, nor any associate or affiliate thereof, has had a direct or
indirect material interest in any transaction within the three years prior to the date hereof or proposed
transaction which has materially affected or will materially affect the Company.
Transfer Agent and Registrars
The Company retains Capital Transfer Agency of Toronto, Ontario to act as registrar and transfer agent for
the Common Shares.
Material Contracts
The Company did not enter into any material contracts, other than contracts entered into in the ordinary
course of business, within the most recently completed financial year.
Interest of Experts
Certain information in this AIF of an economic, scientific or technical nature in respect of the Company’s
mining project is based upon the Technical Report. The authors of the Technical Report are “qualified
persons” for purposes of NI 43-101 and are independent of the Company within the meaning of NI 43-101.
The auditors of the Company are McGovern Hurley Cunningham LLP, Chartered Accountants, of Toronto,
Ontario. McGovern Hurley Cunningham LLP report that they are independent of the Company in accordance
with the Rules of Professional Conduct in Ontario, Canada.
47
The aforementioned persons, and any director, officer, employee or partner, as applicable, of the
aforementioned companies or partnerships, own less than one percent of the issued and outstanding
Common Shares.
Neither the aforementioned persons, nor any director, officer, employee or partner, as applicable, of the
aforementioned companies or partnerships, is currently expected to be elected, appointed or employed as a
director, officer or employee of the Company or any of any associate or affiliate of the Company.
Additional Information
Additional information is provided in the Company’s financial statements and MD&A for our most recently
completed financial year. Copies of these documents are available on SEDAR (www.sedar.com) and the
Company’s website (www.northerngold.ca).
The Company annually distributes its Information Circular, Form 51-102F5, to its shareholders with its annual
meeting materials. These annual information circulars, which are also filed with the System for Electronic
Disclosure and Retrieval (“SEDAR”) at www.sedar.com, contain additional information about the Company and its
activities including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s
securities and securities authorized for issuance under equity compensation plans.
48
TECHNICAL GLOSSARY
“Au” means gold
“BQ” is a standard drill core size with a core diameter of 36.5 mm or 1.437 inches
“CIM” means the Canadian Institute of Mining, Metallurgy and Petroleum
“CIM Standards” means the Mineral Resources and Reserves Definitions and Guidelines adopted by the CIM
Council on December 11, 2005
“cm” means centimeter
“g” means grams, a measure of weight
“g/t” means grams per metric tonne
“Garrison Gold Property” means Northern Gold’s 100% owned exploration property in the Abitibi
Greenstone belt between Timmins and Val d’Or, approximately 40km east of Matheson, Ontario consisting of
four claim groups called the Newfield, Garrcon, Brydges and Linton Claim Groups
“ha” means hectares
“Indicated Mineral Resource” means that part of a Mineral Resource for which quantity, grade or quality,
densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow
the appropriate application of technical and economic parameters, to support mine planning and evaluation
of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing
information gathered through appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably
assumed
“Inferred Mineral Resource” means that part of a Mineral Resource for which quantity and grade or quality
can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not
verified, geological and grade continuity. The estimate is based on limited information and sampling gathered
through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
“kg” means kilogram, a measure of weight equal to 1,000 grams
“km” means kilometer
“kWh/t” means kilowatt hours per tonne
“lb” means one pound, a measure of weight that is equal to 454 g
“m” means meter
“Measured Mineral Resource” means that part of a Mineral Resource for which quantity, grade or quality,
densities, shape and physical characteristics are so well established that they can be estimated with
confidence sufficient to allow the appropriate application of technical and economic parameters, to support
production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed
and reliable exploration, sampling and testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm
both geological and grade continuity
“Mineral Resource” means a concentration or occurrence of diamonds, natural solid inorganic material, or
natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in
or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable
prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a
Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge
“Mineral R” means the economically mineable part of a Measured or Indicated Mineral Resource
demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on
mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of
49
reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and
allowances for losses that may occur when the material is mined
“mineralization” means process or processes by which a mineral or minerals are introduced into a rock,
resulting in a valuable or potentially valuable deposit. It is a general term, incorporating various types, e.g.
fissure filling, impregnation, replacement
“NI 43-101” means National Instrument 43-101 – Standards of Disclosure for Mineral Projects., of the
Canadian Securities Administrators
“NQ” is a standard drill core size with a core diameter of 47.6 mm or 1.875 inches
“oz” means Troy ounces
“t” or “tonne” is a measure of weight equal to 1,000 kg or 2,204.6 lbs
50
APPENDIX A
NORTHERN GOLD MINING INC.
AUDIT COMMITTEE CHARTER
The audit committee (“Audit Committee”) is a committee established by the board of directors (the “Board”)
of Northern Gold Mining Inc. (the “Company”). Its primary function shall be to assist the Board in fulfilling its
oversight responsibilities with respect to financial reporting and disclosure requirements, the overall
maintenance of the systems of internal controls that management have established, and the overall
responsibility for the Company’s external and internal audit processes.
This charter (“Charter”) shall set out the powers and authority of the Audit Committee to conduct or
authorize investigations into any matter within the scope of this Charter. It may request any officer or
employee of the Company, its outside legal counsel, or outside auditor to attend a meeting of the Audit
Committee or to meet with any member(s) of the Audit Committee.
The Audit Committee shall be accountable to the Board. In the course of fulfilling its specific responsibilities
hereunder, the Audit Committee shall maintain an open communication between the Company’s outside
auditor and the Board.
The responsibilities of a member of the Audit Committee shall be in addition to such member’s duties as a
member of the Board.
The Audit Committee has the duty to determine whether the Company’s financial disclosures are complete,
accurate, in accordance with IFRS, and fairly present the financial position and risks of the organization. The
Audit Committee should, where it deems appropriate, resolve disagreements, if any, between management
and the outside auditor and review compliance with laws and regulations and the Company’s own policies.
The Audit Committee will provide the Board with such recommendations and reports with respect to the
financial disclosures of the Company as it deems advisable.
Composition
The Audit Committee shall consist of at least three directors to serve on behalf of the Board, of whom at least
two shall be independent. The members shall be appointed annually by the Board and shall meet the
independence, financial literacy, and experience requirements of the TSX-V (including NI 52-110) and other
regulatory agencies as required.
A majority of members will constitute a quorum for a meeting of the Audit Committee.
The Board will appoint one member to act as the chairman of the Audit Committee (“Chairman”). In his
absence, the Audit Committee may appoint another person provided a quorum is present. The Chairman will
appoint a recording secretary (“Secretary”) of the meeting, who need not be a member of the Audit
Committee and who will maintain the minutes of the meeting.
Meetings
At the request of the external auditor, the chief executive officer, the chief financial officer, or any member of
the Audit Committee, the Chairman will convene a meeting of the Audit Committee. In advance of every
meeting of the Audit Committee, the Chairman, with the assistance of the Secretary, will ensure that the
agenda and meeting materials are distributed in a timely manner.
The Audit Committee shall meet no less than four times per year or more frequently if circumstances or the
obligations require.
51
Duties and Responsibilities
The duties and responsibilities of the Audit Committee shall be as follows:
A. Financial Reporting and Disclosure
i.
ii.
Review and discuss with management and the outside auditor at the completion of the annual
examination:
a.
the Company’s audited financial statements and related notes;
b.
the outside auditor’s audit of the financial statements and their report thereon;
c.
any significant changes required in the outside auditor’s audit plan;
d.
any serious difficulties or disputes with management encountered during the course of the
audit; and
e.
other matters related to the conduct of the audit, which are to be communicated to the Audit
Committee under generally accepted auditing standards.
Review and discuss with management and the outside auditor, at the completion of any review
engagement or other examination, the Company’s interim (quarterly) financial statements.
iii. Review and discuss with management the annual reports, the interim (quarterly) reports, the
management discussion and analysis, annual information form, prospectus, and other disclosures
and, if thought advisable, recommend the acceptance of such documents to the Board for approval.
iv. Review and discuss with management any guidance being provided to shareholders on the expected
future results and financial performance of the Company and provide their recommendations on such
documents to the Board.
v.
Inquire of the auditors the quality and acceptability of the Company’s accounting principles, including
the clarity of financial disclosure and the degree of conservatism or aggressiveness of the accounting
policies and estimates.
vi. Meet with the outside auditor and management in separate executive sessions, as necessary or
appropriate, to discuss any matters that the Committee or any of these groups believe should be
discussed privately with the Audit Committee.
B. External Auditor
i.
Consider, in consultation with the outside auditor, the audit scope and plan of the outside auditor.
ii.
Recommend to the Board the outside auditor to be nominated and review the performance of the
auditor, including the lead partner of the external auditor.
iii. Confirm with the outside auditor and receive written confirmation at least once per year as to the
outside auditor’s internal processes and quality control and disclosure of any investigations or
government enquiries, reviews, or investigations of the outside auditor.
iv. Take reasonable steps to confirm the independence of the outside auditor, which shall include:
52
a.
ensuring receipt from the outside auditor of a formal written statement delineating all
relationships between the outside auditor and the Company, consistent with Generally
Accepted Auditing Standards (GAAS);
b.
considering and discussing with the outside auditor any disclosed relationships or services,
including non-audit services, that may impact the objectivity and independence of the outside
auditor; and
c.
approving in advance any non-audit related services provided by the auditor to the Company
with a view to ensuring independence of the auditor, and in accordance with any applicable
regulatory requirements, including the requirements of the TSX-V with respect to approval of
non-audit related serviced performed by the auditor.
C. Internal Controls and Audit
i.
Review and assess the adequacy and effectiveness of the Company’s systems of internal controls and
management information systems through discussion with management and the external auditor to
ensure that the Company maintains appropriate systems, is able to assess the pertinent risks of the
Company, and that the risk of a material misstatement in the financial disclosures can be detected.
ii.
Assess the requirement for the appointment of an internal auditor for the Company.
iii. Inquire of management and the outside auditor about the systems of internal controls that
management and the Board of Directors have established and the effectiveness of those systems. In
addition, inquire of management and the outside auditor about significant financial risks or
exposures and the steps management has taken to minimize such risks to the Company.
D. Reports
The Audit Committee shall receive, investigate and act on complaints and expressions of concern ("Reports")
by employees regarding:
i.
Accounting, internal accounting controls and auditing matters, including those regarding the
circumvention or attempted circumvention of internal accounting controls or that would otherwise
constitute a violation of the Company’s accounting policies (an "Accounting Allegation");
ii.
Compliance with legal and regulatory requirements (a "Legal Allegation"); and
iii. Retaliation against employees who make Accounting Allegations or Legal Allegations (a "Retaliatory
Act").
Responsibilities of the Audit Committee created by these procedures may, at the discretion of the Audit
Committee, be delegated to any member of the Audit Committee.
Oversight Function
While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of
the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are
complete and accurate or are in accordance with IFRS and applicable rules and regulations. These are the
responsibilities of management and the external auditors. The Audit Committee, the Chairman, and any
members identified as having accounting or related financial expertise are members of the Board appointed
to the Audit Committee to provide broad oversight of the financial, risk, and control related activities of the
Company, and are specifically not accountable or responsible for the day to day operation or performance of
such activities. Although the designation of a Member as having accounting or related financial expertise for
53
disclosure purposes is based on that individual’s education and experience, which that individual will bring to
bear in carrying out his or her duties on the Audit Committee, such designation does not impose on such
person any duties, obligations, or liability that are greater than the duties, obligations, and liability imposed
on such person as a member of the Audit Committee and Board in the absence of such designation. Rather,
the role of a member who is identified as having accounting or related financial expertise, like the role of all
members, is to oversee the process, not to certify or guarantee the internal or external audit of the Company’s
financial information or public disclosure.
Charter Review
The Audit Committee will annually review and reassess the adequacy of this charter and any applicable
policies and submit any recommended changes to the Board for approval.
Approval
Approved by the Board (August 2011).
Amended and re-approved by the Board (May 2012).
54