The Heva and Hosco West Extension areas are at the advanced stage of exploration and are located along the Cadillac Break, in Joannes Township, two kilometres northeast of the Rouyn-Noranda airport and 20 kilometres east of Rouyn-Noranda. The property extends east-west for more than eight kilometres and, in places, is three kilometres in width.

The project is comprised of five sectors based on different ownership agreements. The Hosco sector currently represents the core of the mineral resources located on the property. The other sectors include Heva, Alexandria, Henriksen, and Aurizon. The project comprises 156 claims covering 4,294 hectares in 3 separate blocks.

Aurizon owns a 100% interest, subject to certain underlying royalties, in all of the sectors comprising the Joanna Project.

Advanced Stage Project Development

Large in-pit gold resource at Hosco
Additional gold resources at Heva and Hosco West Extension
Excellent exploration potential
Strategic land position in Cadillac Break
Excellent infrastructure, road, rail and power
Higher grade mineralization discovered on the Heva and Hosco West Extension Zones
Metallurgical test work on the Heva mineralization indicates "non-refractory" which could potentially deliver high recoveries

During 2012, the Company incurred expenditures at Heva-Hosco totalling $9.7 million, of which $7.7 million related to exploration work, and $2.0 million related to feasibility work and environmental impact studies.

Exploration Focus for 2013

An initial $1.5 million exploration program, consisting of further drilling, metallurgical work and a 10,000 metre of surface drill program is planned for the Heva deposit, to fill the gap inside the resource outline on sections that are supported by historic holes. Additional drilling of the down-dip extensions on Heva and Hosco West will correspond to the conceptual mining and economic studies and metallurgical testworks that are planned. With the 2012 drill program at Heva now completed, it is intended that an in-pit and underground mineral resource estimate will be completed within the first half of 2013. Up to three drill rigs will be active with the majority of the drilling to be performed during the first quarter of 2013.

2012 Exploration Program

The 2012 exploration program is complete. The objectives of this drill program was to increase the inferred mineral resources in the Heva and Hosco West Extension areas near surface, and upgrade the depth potential where higher grades trends were present, and to identify sufficient non-refractory gold mineralization that could lead to a staged development of the Hosco mineral reserves and improve the overall economics of the feasibility study competed in June 2012. Following the receipt of the remaining assay results from the 53,000 metre drill program completed in September 2012, a mineral resource estimate will commence using a dual approach to evaluate the potential of an underground or an open pit operation, and should be completed in the first half of 2013. Metallurgical test work will be initiated for different mineralized zones.

One hundred forty-three (143) holes totalling 53,234 metres have been completed in the 2012 drill program. Assay results for one hundred twenty one (121) holes have been obtained to date and twenty-two (22) holes are pending.

Hosco Feasibility Study

The results of the Hosco Feasibility Study were received in the second quarter of 2012, please see below under the Outlook section for more detail.

Four drills were active during the second quarter of 2012 focusing on the Heva and Hosco West Extension areas.

As announced during the year, assays have been received from eighty nine drill holes, of which sixty drill holes returned between one and five mineralized intersections, calculated with a minimum cut-off of 0.5 grams of gold per tonne over 5 metres above a vertical depth of 200 metres. Nineteen holes returned one to three positive intervals down to a maximum depth of 400 metres, using a cut-off grade of 3 grams of gold per tonne over a minimum thickness of 3 metres. Based on the encouraging results obtained to date, deeper holes to follow the continuity of the mineralization down dip to 600 metres will commence shortly.

The reconnaissance drilling on the Heva deposit is nearing completion. An in-pit resource update of Heva will be performed during the year. In addition, the interpretation of the higher grade trends shows a well-defined plunge, and has the potential to move the project toward a combination of surface and underground production targets.

Initial metallurgical test work of the Heva mineralization indicates that it is non-refractory, and could potentially deliver high recoveries through direct cyanidation of the ore.

Exploration and feasibility study expenditures at Joanna during the second quarter totalled $2.8 million and for the first half of 2012 totalled $5.5 million.

Outlook

Aurizon reported that it received the results of a positive Feasibility Study on June 5, 2012, which established in-pit mineral reserves of 1.66 million ounces of gold in the Hosco deposit that forms part of its 100% owned Joanna project. The Feasibility Study was prepared by BBA Inc. of Montreal, ("BBA") with contributions from other engineering firms and consultants, in accordance with the Standards of Disclosure for Mineral Projects as defined by National Instrument 43-101 ("NI 43-101").

“The Joanna property has provided significant exploration success for Aurizon and the results of the Feasibility Study has realized a 67% increase in Proven and Probable In-Pit Mineral Reserves at the Hosco deposit compared to the 2009 pre-feasibility study.” said George Paspalas, President and Chief Executive Officer. “The Company has also encountered follow-up exploration success at the Heva deposit and the Hosco West Extension areas, also on the Joanna property. Whilst the Feasibility Study on the Hosco deposit generates a positive return at three-year trailing average gold prices, we believe that it is prudent, in terms of capital allocation, to defer development and permitting of the Hosco deposit and continue to pursue exploration of these areas, which if successful, could lead to a staged and perhaps more financially beneficial development strategy at Joanna.”

“The opportunity at Heva lies in the fact that our early drilling is indicating higher grade ore potential than at Hosco and initial metallurgy has returned very good gold recoveries using conventional cyanidation.” continued George Paspalas. “The Hosco West Extension area has identified refractory mineralization that is significantly higher grade than the average grade in the conceptual Hosco pit. The Company intends to spend an additional $4.2 million to continue the drilling in these areas. We remain committed to growing the Company by pursuing opportunities that would be accretive to shareholder value.”

The Feasibility Study was prepared as an open pit mining project relating solely to the mineral reserves located on the Hosco deposit. The Hosco deposit forms part of the Joanna Project which is located in pro-mining north-western Quebec, 20 kilometres east of the town of Rouyn-Noranda. The in-pit mineral reserves were estimated at a cut-off grade of 0.5 g/t for a total diluted proven and probable reserve estimate of 41.1 million tonnes at 1.26 grams/tonne representing 1.66 million ounces of gold. The mine plan was designed for a 8,500 tonnes per day operation, with an average stripping ratio of 4.49 to 1 and a life of mine of 13.4 years.

The milling circuit includes crushing, grinding, gravity, flotation, pressure oxidation and carbon-in-pulp leaching (CIP). Metallurgical test work indicates that the use of the pressure oxidation technology prior to leaching improves the overall gold recoveries to 87.5%. The study provides for the low sulphide tailings, without cyanide, to be stored in a flotation thickened tailings pond and the tailings from the autoclave circuit would be stored in a specifically designed impoundment.

The pre-production capital costs and sustaining costs for the Hosco deposit are estimated, respectively, at $422 million and $97 million. The average operating cash cost is estimated at US$716 per ounce of gold and $25.32 per tonne milled. The financial analysis, using a price of gold of US$1,350 per ounce, indicates a pre-tax net present value (“NPV”) (using a 5% discount rate) of $112 million with a pre-tax internal rate of return (“IRR”) of 8.7% and a payback period of 8.2 years. On an after tax basis, Aurizon estimates that the IRR is 6.5%.

Mineral Reserves and Resources

The in-pit mineral reserves were estimated within a detailed engineered pit design by using the measured and indicated resources at a cut-off grade of 0.5 g/t. The optimized pit shell was generated using the Lerchs-Grossmann pit optimizer algorithm using the cost and economic parameters estimated by BBA.

The block model was prepared by SGS Geostat using the Ordinary Kriging method. In addition to the resources identified at the prefeasibility stage, the database includes the results of the 2010 and 2011 drilling campaigns. A total of 866 surface holes equivalent to 199,509 metres and 3,243 historical underground holes were included in the calculation. A total of 123,589 assays were available for the resource calculation.

Mining and Production

The mine plan completed by BBA includes 41.1 million tonnes of ore at 1.26 grams of gold per tonne and requires the removal of 22.3 million tonnes of overburden and 162.3 million tonnes of waste rock resulting in a life-of-mine strip ratio of 4.49 to 1. The overburden consists of silt and clay and varies in thickness between 6 and 15 metres. It is planned that the overburden will be removed during winter seasons.

It is anticipated that permitting and construction of the Mine would take approximately 3 years.

Total gold production over a 13.4 year mine life is estimated at 1.45 million ounces averaging 110,000 ounces per year.

Conventional open pit mining methods will be used requiring a fleet of 100 ton class and smaller haul trucks, hydraulic excavators (10 m³), production drills and various ancillary equipment. Mine operations were designed to support an average daily production rate of 8,500 tonnes. Initial production will start from a smaller pit and will be extended in two additional pushbacks; mining of the West Hosco pit is expected to begin in year 4.

The pits were designed with a triple benching arrangement and include a 15 metre geotechnical safety berm at every 120 metre vertical height. Based on the results of rock mechanic studies by Golder Associates, the recommended inter-ramp pit slope will be 53° for the hanging wall (north), 49° for the footwall (south) as well as both east and west sectors.

To view the entire June 5, 2012 news release titled "Aurizon Receives Results of Feasibility Study for Joanna's Hosco Deposit" please go to our news release section on this website.

Quality Control and Data Verification

Information of a scientific or technical nature of the Feasibility Study has been prepared by and under the supervision of Angelo Grandillo, Eng., Project Manager of BBA, Patrice Live, Eng., Mining Manager of BBA, Ghislain Fournier, Eng., General Manager Technical Services of Aurizon and Jean-Pierre Landry, Eng., General Manager Projects and Construction of Aurizon, qualified persons as defined by National Instrument 43-101. The technical and scientific information contained in this news release has been reviewed and approved by Mr. Grandillo, Eng, Mr. Live, Eng, Ghislain Fournier, Eng., and Jean-Pierre Landry, Eng., also qualified persons as defined by National Instrument 43-101.

The data disclosed including sampling, analytical and test data as well as the current mineral resource estimate was completed by Maxime Dupéré, P.Geo., from SGS Canada Inc. (Geostat) an independent qualified person under NI 43-101 guidelines using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Reserves Definition and Guidelines.

Additional technical information and details regarding verification of data, including sampling, analytical and test data underlying the information herein, is contained in the “Technical Report – Mineral Resource Estimation, Joanna Gold Project, Rouyn-Noranda, Quebec, Aurizon Mines Ltd. – September 2011 Update, Effective date December 31, 2011”, prepared by BBA, which can be found under Aurizon’s profile on www.sedar.com.

Qualified Persons

The Feasibility Study was prepared by leading independent industry engineering firms and consultants, all Qualified Persons under National Instruments 43-101, with the collaboration of the Aurizon Technical Group.

BBA Inc.

Patrice Live, Eng. Mining Manager (mineral reserves, pit design, mine planning, financial analysis, mining operating and capital costs)

Angelo Grandillo, Eng. (metallurgical test work, ore processing, milling operating and capital costs).

Roche

Yves Thomassin, M. ScA., (environment, restoration, operating and capital cost estimates).

SGS-Geostat Ltd.

Maxime Dupéré. Geologist (mineral resources)

Geology

Mineralization at Joanna is closely related to the east-west Cadillac fault and forms a 200 metre wide corridor composed of different mineralized lenses parallel to the fault, dipping 55 degrees to the north. Mineralization takes the form of a few millimetres to a 15 centimetre-wide quartz vein network inside the altered sediment rock with finely-disseminated sulphides. Mineralization has been defined and correlated based on altered mineral assemblages (biotite, tremolite, carbonates, muscovite, tourmaline, chlorite), quartz textures, deformation features and sulphides types (pyrrhotite and arsenopyrite).

At Hosco, mineralization is located within three main lenses, one located north of the fault and two at the southern side of the fault. Each lens shows a thickness of between 15 and 60 metres and a variable lateral extension of between 300 and 700 metres.

This page was last updated: April 3, 2013