Quebec - Casa Berardi Project

Outlook

Casa Berardi entered its sixth year of commercial operations in 2012, following the re-commencement of operations in November 2006.

2011 Gold Production
Record gold production from Aurizon's 100% owned Casa Berardi mine for the year ended December 31, 2011, totalled 163,845 ounces from the processing of 698,123 tonnes at an average grade of 8.0 grams of gold per tonne.  Recoveries for the year averaged 91.3%.  Actual gold production was in line with the Company's 2011 guidance of approximately 165,000 ounces and it is anticipated that total cash costs per ounce will be below the Company's guidance of US$535 per ounce for 2011.

Fourth Quarter 2011 Gold Production
Ore processed in the fourth quarter 2011 amounted to 170,283 tonnes at an average grade of 9.1 grams of gold per tonne.  Metallurgical recoveries of 92% resulted in gold production of 45,995 ounces in the quarter.

Forecast Gold Production for 2012
It is estimated that Casa Berardi will produce approximately 155,000 - 160,000 ounces of gold in 2012 at an average grade of 7.5 grams of gold per tonne.  Average daily ore throughput is estimated at 2,000 tonnes per day, similar to 2011.  Mine sequencing in 2012 will result in ore grades that are expected to be approximately 6% lower than those achieved in 2011.  Approximately 42% of production will come from Zone 113, 41% from the Lower Inter Zone, and the residual 17% from smaller zones and development material.

Assuming a Canadian/U.S. dollar exchange rate at parity, total cash costs per ounce for the year are anticipated to approximate US$600 per ounce in 2012.  Onsite mining, milling and administration costs are expected to average $134 per tonne, up approximately 12% from 2011 projected costs as a result of higher stope preparation costs and longer haulage distances.

As quarterly operating results are expected to fluctuate throughout the year, they will not necessarily be reflective of these full year averages.

Capital expenditures at Casa Berardi, funded from operating cash flow, are estimated to total $80 million in 2012, as a result of three major capital projects:  shaft sinking, construction of a paste backfill plant to maximize the extraction of high grade ore from Zone 113 and to allow greater mining flexibility, and continued replacement of mobile equipment.  These expenditures are comprised of the following:

Capital expenditures	2012 Budget (in millions)
Sustaining capital	$29.2
Shaft deepening	$16.7
Property, plant & equipment	$10.4
Paste backfill plant	$12.0
Tailings pond	$2.3
Exploration	$9.4
Total	$80.0

Sustaining capital expenditures at Casa Berardi are budgeted to be $29.2 million and will include continued development of the lower portions of Zone 118 and 123.

In 2012, $16.7 million is budgeted for the deepening of the West Mine production shaft a further 285 metres to provide access to the lower portion of the 113, 118 and 123 Zones.  The shaft, currently at a depth of 795 metres, will be extended to approximately 1,080 metres below surface, which will provide access at the 1,010 metre level to develop a drift from the shaft to Zones 118 and 123.  The shaft deepening is expected to be completed near the end of 2012 and commissioned by the first quarter of 2013.

Mining equipment replacement and fleet expansion to support the expanded development activities is budgeted at $10.4 million.  A further $12.0 million will be invested in the construction of a paste backfill plant and $2.3 million will be invested on raising the tailings pond for future capacity.

	Q3 2011	Q2 2011	Q1 2011	Q4 2010	Q3 2010
Operating results
Tonnes milled	188,571	178,233	161,036	191,697	169,913
Grade - grams/tonne	7.95	8.00	6.85	6.86	6.15
Mill recoveries - %	92.2%	90.4%	90.2%	88.6%	89.1%
Gold production - ounces	44,457	41,418	31,976	37,496	29,905
Gold sold - ounces	40,257	39,900	34,306	34,808	30,755
Per ounce data - US$(4)
Average realized gold price (i)	$1,695	$1,521	$1,392	$1,376	$1,119
Total cash costs (ii)	$497	$544	$621	$531	$604
Amortization (iii)	250	225	238	263	254
Total production costs (iv)	$747	$769	$859	$794	$858

Table footnotes:
⁽ⁱ⁾     Realized gold prices net of realized derivative gains or losses divided by ounces sold.
⁽ⁱⁱ⁾     Operating costs net of by-product credits, divided by ounces sold, and divided by the average
         Bank of Canada Cad$/US$ rate.
⁽ⁱⁱⁱ⁾    Depreciation and amortization charges.
^(iv)    Total cash costs plus depreciation and amortization charges.

Casa Berardi Shaft Deepening

In the first quarter of 2011, a contract was awarded for the deepening of the West Mine production shaft from the 760 metre level down to the 1,080 metre level.  Deepening the shaft is a component of the overall strategy to have greater mining flexibility in the West Mine.

Casa Berardi performed in line with expectations in 2010 despite a revised mine plan resulting from challenging ground conditions in a localized area of Zone 113 and reduced availability of underground mining equipment.  Gold production was approximately 6% lower than plan and unit operating costs were 4% higher than plan. 

Gold production for the year totalled 141,116 ounces, 11% lower than the 159,261 ounces produced in 2009 as a result of the anticipated sequencing of lower grade ore in 2010.  The average ore grade of 6.75 grams per tonne achieved in 2010 matched expectations.  Increased daily ore throughput of 1,980 tonnes per day in 2010 compared to 1,887 tonnes per day in 2009 was offset by lower ore grades and mill recoveries, resulting in the decrease in gold production in 2010. 

Total cash costs in 2010 were US$541 per ounce, 10% higher than plan and compared to the US$401 per ounce costs in 2009, as lower ore grades, lower mill recoveries, and a strong Canadian dollar impacted costs.  Unit operating costs in 2010 were stable on a Canadian dollar basis at $108 per tonne, matching the prior year’s costs as higher ore throughput offset higher mining costs resulting from additional ground support and lower productivity from mining equipment.  Operating profit margins increased by 18% to US$604 per ounce from US$514 per ounce in 2009, due to higher realized gold prices.

BBA Inc. (BBA) was commissioned by Aurizon to undertake a prefeasibility study on the Principal Mine open pit.  Roscoe Postle Associates Inc. (“RPA”) was commissioned by Aurizon to prepare updated mineral reserve and mineral resource estimates on the rest of the property.  

Proven and Probable Mineral Reserves have increased as a result of:

• At the West Mine, the 2010 mine production in Zones 113, Lower Inter, North West and 115 have been more than replaced by gains in mineral reserves primarily from the Principal Zone open pit and  Zone 123S.  Additional reserve increases were provided from Zones 118 and 109.
• As a result of the addition of the lower grade ore from the Principal Zone open pit, tonnage has increased by 77%, grade has decreased by 19% and ounces of gold have been increased by 44% compared to 2009. 
• Mineral reserves are estimated using an average long-term gold price of US$950 per ounce and a US$/C$ exchange rate of 1:1, compared to US$825 per ounce in 2009 and a US$/C$ exchange of 1:1.09.  A minimum cut off grade of 4.1 grams of gold per tonne was used for the underground zones, based on long term operating costs and gold prices.  A minimum cut off grade of 1.2 grams and 0.5 grams of gold per tonne was used respectively for the East Mine and Principal Zone open pits.  In 2009, the minimum cut off grade was 3.9 grams of gold per tonne for the underground zones.
• As the mining industry is currently experiencing gold prices that are higher than US$950 per ounce, the operations periodically mine ore that is not included in mineral reserves as the grades are lower than the long term minimum cut-off grades.

Casa Berardi Reserves and Resources - December 31, 2010

The Casa Berardi gold deposits are located along a five kilometre east-west mineralized corridor. They include the East and West mines, and the Principal Zone. The Casa Berardi gold deposits can be classified as an Archean sedimentary-hosted lode gold deposit. The gold mineralization is superimposed on a continuous graphitic mudrock unit corresponding to the Casa Berardi Fault plane. Gold occurs mainly south of the Casa Berardi Fault, and sometimes on both sides of the fault.

The mine has produced over 1.3 million recovered gold ounces since commencing production in 1986, including 636,400 recovered ounces since Aurizon re-commissioned production in December 2006.

Scott Wilson Roscoe Postle Associates Inc. (Scott Wilson RPA) were commissioned by Aurizon to prepare updated mineral reserve and mineral resource estimates on the different zones of the property, in accordance with the Standards of Disclosure for Mineral Projects as defined by N1 43-101.

Click to enlarge

CASA BERARDI MINE MINERAL RESERVE ESTIMATE As at December 31,
	2010			2009
	Tonnes	Grade Grams/tonne	Gold Ounces	Tonnes	Grade Grams/tonne	Gold Ounces
Measured Mineral Resources
Lower Inter (LI)	910,000	8.0	233,200	965,000	8.6	266,100
North West (NW)	42,000	5.8	7,900	62,000	5.6	11,200
113	587,000	8.8	167,000	893,000	7.7	222,000
115	147,000	11.4	54,100	156,000	11.3	56,400
Principal -- Open Pit	89,000	6.3	18,000	-	-	-
East Mine -- Open Pit	407,000	4.2	54,400	407,000	4.2	54,400
East Mine Underground	88,000	6.3	17,800	88,000	6.3	17,800
Total Proven Reserves	2,271,000	7.6	552,400	2,571,000	7.6	627,800
Lower Inter (LI)	30,000	8.2	7,900	32,000	10.2	10,500
South West (SW)	72,000	4.6	10,700	72,000	4.6	10,700
109	114,000	5.7	21,000	68,000	5.4	11,700
111	37,000	5.4	6,400	37,000	5.4	6,400
113	402,000	9.9	127,000	535,000	8.2	141,200
115	0	0.0	0	2,000	4.1	300
117S	19,000	7.0	4,300	19,000	7.0	4,300
118	1,021,000	6.4	208,600	767,000	6.0	148,400
123S	493,000	7.4	117,700	-	-	-
Principal -- Open Pit	3,072,000	3.6	352,400	-	-	-
East Mine -- Open Pit	228,000	3.7	26,800	228,000	3.7	26,800
East Mine Underground	63,000	8.2	16,500	63,000	8.2	16,500
Low-Grade Development	31,000	3.9	3,900	40,000	3.9	5,000
Total Probable Reserves	5,583,000	5.0	904,100	1,862,000	6.4	382,000
Total Proven & Probable Reserves	7,854,000	5.8	1,457,000	4,433,000	7.1	1,010,000

Notes:

1. Open pit mineral reserves were estimated by BBA and underground mineral reserves were audited by RPA.
2. Mineral reserves and resources estimates have been completed in accordance with the Standards of Disclosure
   for Mineral Projects as defined by National Instrument 43-101.  Mineral resources are exclusive of mineral
   reserves.  Mining depletion for 2010 is included in 2010 Mineral reserves.
3. Mineral Reserves are estimated at a cut-off grade of 4.15 g/t Au for underground, and 1.2 g/t Au for East Mine
   open pit and 0.5 g/t Au for Principal open pit.
4. Mineral Reserves are estimated using an average long-term gold price of US$950 per ounce and a
   US$/C$ exchange rate of 1:1.
5. A minimum mining width of three metres was used.
6. Totals may not represent the sum of the parts due to rounding.
7.  pit mineral reserves were estimated by BBA and underground mineral reserves were audited by RPA. 
   

Note:  An updated resource estimate for the Principal area has been completed in 2010 to incorporate results from a winter drill program.  Refer to the Casa Berardi Exploration section.

CASA BERARDI MINE MINERAL RESOURCE ESTIMATE As at December 31,
	2010			2009
	Tonnes	Grade Grams/tonne	Gold Ounces	Tonnes	Grade Grams/tonne	Gold Ounces
Measured Mineral Resources
Lower Inter (LI)	122,000	5.1	19,800	98,000	5.1	16,200
113	290,000	6.6	61,300	155,000	8.1	40,100
113-5	10,000	5.7	1,900	-	-	-
115	9,000	4.9	1,500	-	-	-
115-2	34,000	12.2	13,200	-	-	-
North West	9,000	5.0	1,400	9,000	5.0	1,400
Principal Underground	153,000	7.3	36,000	-	-	-
East Mine -- Open Pit	311,000	3.1	31,300	311,000	3.1	31,300
East Mine Underground	216,000	6.5	45,500	216,000	6.5	45,500
Total Measured Resources	1,155,000	5.7	211,900	789,000	5.3	134,500
Indicated Mineral Resources
Lower Inter (LI)	3,000	8.8	900	3,000	5.3	600
South West (SW)	300,000	4.7	45,000	300,000	4.7	45,000
Inter	124,000	4.4	17,700	124,000	4.4	17,700
109	21,000	4.3	2,900	-	-	-
111	52,000	5.2	8,800	52,000	5.2	8,800
113	46,000	5.1	7,600	60,000	4.9	9,500
113-5	2,000	6.0	400	-	-	-
113(S4)	245,000	5.5	43,000	245,000	5.5	43,000
115	-	-	-	-	-	-
115-2	4,000	10.3	1,300	-	-	-
118	518,000	5.2	86,900	265,000	6.0	51,800
123S	136,000	5.4	23,700	-	-	-
Principal -- Open Pit	-	-	-	1,785,000	6.2	355,300
Principal Underground	1,257,000	7.4	298,500	837,000	6.4	171,700
East Mine -- Open Pit	404,000	2.7	34,500	404,000	2.7	34,500
East Mine Underground	90,000	6.3	18,100	90,000	6.3	18,100
152	125,000	5.8	23,200	125,000	5.8	23,200
Total Indicated Resources	3,327,000	5.7	612,400	4,289,000	5.6	778,100
Total Measured & Indicated Resources	4,481,000	5.7	824,300	5,078,000	5.6	912,600

CASA BERARDI MINE MINERAL RESOURCE ESTIMATE As at December 31,
	2010			2009
	Tonnes	Grade Grams/tonne	Gold Ounces	Tonnes	Grade Grams/tonne	Gold Ounces
Measured Mineral Resources
104	115,000	6.6	24,500	115,000	6.6	24,500
113 (S4)	15,000	5.8	2,700	15,000	5.8	2,700
118	369,000	7.9	94,200	1,018,000	6.8	222,100
123S	909,000	8.0	234,100	714,000	9.4	216,300
Principal - Open Pit	655,000	2.5	53,200	841,000	6.0	161,500
Principal Underground	628,000	6.6	132,700	836,000	6.0	160,500
East Mine -- Open Pit	310,000	3.0	30,200	310,000	3.0	30,200
East Mine Underground	156,000	9.1	45,600	156,000	9.1	45,600
152	13,000	8.2	3,500	13,000	8.2	3,500
East Mine Cherty	225,000	6.8	49,300	225,000	6.8	49,300
160 In Pit Resources	131,000	1.7	7,100	-	-	-
160 Underground	455,000	4.8	70,800	243,000	5.4	42,200
Total Inferred Resources	3,981,000	5.8	747,900	4,487,000	6.6	958,500

Notes:
1. Open pit mineral resources were estimated by BBA and underground mineral resources were estimated by RPA.
2. CIM definitions were followed for Mineral Resources.
3. Mineral Resources are estimated at cut-off grades of:
• 4 g/t Au for West Mine, Principal Mine and East Mine.
• 3 g/t Au for South West, Inter and 104 zones in the West Mine. Those zones were estimated by Aurizon in 2000 using 2D polygons on longitudinal sections and reviewed by RPA in 2005.
• 1.30 g/t Au for the East Mine – Open Pit
• 0.5g/t Au for the Principal – Open Pit Mineral Resources are estimated using an average long-term gold price of US$950 per ounce, and a US$/C$ exchange rate of 1:1.
4. Minimum mining widths of two to three metres were used.
5. Mineral Resources are exclusive of Mineral Reserves.
6. Totals may not represent the sum of the parts due to rounding.
7. Mineral resources which are not mineral reserves do not have demonstrated economic viability