GOLD PRICE:


Joanna Gold Project, Quebec

The Joanna Gold Project is 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 six 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, La Pause, and O'Connor-Robert. The project comprises 155 claims covering 4,252 hectares in 3 separate blocks.

Aurizon owns a 100% interest, subject to certain underlying royalties, in all of the sectors comprising the Joanna Project, with the exception of the Alexandria sector, where Aurizon is required to make a cash payment of $1.6 million on or before December 23, 2010 in order to earn its 100% interest.

At Joanna, a $3.4 million surface exploration program, comprising 28,000 metres of drilling, is testing targets to the north and south of the Hosco deposit; performing infill drilling on the Heva deposit; testing a potential satellite pit, approximately 700 metres west of the proposed Hosco pit; and testing potential extensions of the Hosco pit. Two (2) drill rigs are currently active on the Project.

Outlook

During the first quarter of 2010, drilling focussed on the lateral and depth extension of the Hosco deposit. This drilling resulted in an increase in measured and indicated mineral resources of 35% or 446,000 ounces.

It is planned that two or three drill rigs will be active on the property to complete the $3.4 million exploration program. These rigs will perform exploration and infill drilling on surface targets covering various extensions to the Hosco deposit, the Alexandria property and the Heva deposit. Detailed metallurgical test work, environmental baseline work and geotechnical studies are in progress. The results from this work will be incorporated into a final feasibility study, which is anticipated to be completed by the end of the fourth quarter of 2010.

In November 2009, the Company received a positive Pre-feasibility study on the Hosco deposit and is now proceeding to final feasibility. The Pre-feasibility study was prepared by BBA Inc., Montreal, Quebec ("BBA") with contributions from other leading engineering firms and consultants, in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects as defined by ("NI 43-101").

The Pre-feasibility study was prepared as a stand-alone project, relating solely to the mineral reserves located on the Hosco deposit, and accordingly does not take into account any of the mineral resources contained in the Heva deposit, which forms a part of the Joanna Project. The Pre-feasibility Study also does not take into account any synergies from the potential utilization of Aurizon's milling facilities, management and infrastructure at Casa Berardi to improve the economics of the Joanna Project; nor does it consider the excellent exploration potential within Aurizon's large land position surrounding the Hosco deposit.

The proposed open pit operation, outlined in the Pre-feasibility study, has the potential in itself to increase Aurizon's gold production by 60% to approximately 270,000 ounces per year.

The Pre-feasibility Study highlights are summarized below:

Assumptions

 

      Gold Price (US$/oz)

825

      Canadian $ to US$ rate

1.10

      Fuel price (C$/litre)

0.70

Mineral Reserves
       Hosco Mineral Reserves (million ounces)


1.0

Mine Parameters

 

      Ore milled

 

        Mine plan tonnage (million tonnes)

23.6

        Mine plan grade (grams/tonne)

1.31

        Stockpile grade tonnage (million tonnes)

2.4

        Stockpile grade (grams/tonne)

0.35

      Waste to ore ratio

3.8:1

      Production rate (annualized tonnes per day)

8,500

      Estimated gold recovery (%)

86.8

      Total gold recovered (ounces)

887,000

      Pre-production period (years)

1.5

      Mine life (years)

8.3

      Average annual gold production (ounces)

110,000

Costs

 

      Pre-production capital ($ millions)

187

      Initial site restoration ($ millions)

5

      Sustaining capital and restoration ($ million)

31

      Cost per tonne milled ($/t)

16.25

      Average operating cash cost per ounce (US$/oz)

434

      Average total cash cost per ounce (US$/oz)

455

Financial Return

 

      Payback from start of production (years)

3.9

      Internal Rate of Return (before tax)

14.4%

      Net present value, pre tax, 5% discount ($ millions)

74

 

(All dollar figures expressed in Canadian dollars, except where indicated)



At the prevailing gold price as of November 6, 2009, of US$1,090 per ounce and a Canadian to U.S dollar exchange rate of 1.07, Aurizon has determined that the pre-tax NPV increases to $249 million at a 5% discount rate and the pre-tax IRR increases to 31.8%.

The delivery of the Pre-feasibility Study completed the first stage of Aurizon's Continuous Development Program at Joanna, aimed at advancing the Joanna Project to commercial production, by demonstrating an economic, environmental and social gain, while mitigating the technical, financial, and environmental risks of the Project.

As mineral reserves could be affected by permitting and social acceptance issues, Aurizon held 35 meetings prior to the completion of the Pre-feasibility Study with various stakeholder groups and has incorporated most of their views and recommendations into the current study or as recommendations to be addressed in the final Feasibility Study. Discussions with stakeholders will continue in order to ensure that the final Feasibility Study will integrate their views with a view to providing economical, environmental and social gains for all concerned parties.



Please go to our news release page to view the entire news release on the Joanna Pre-feasibility study dated November 11, 2009.


Mineral Resources

An updated mineral resource estimate has been completed for the Hosco deposit.  The updated mineral resource estimate was prepared by SGS Canada Inc. - Geostat ("SGS Geostat") in collaboration with Aurizon's personnel.

The updated mineral resource estimate integrates results of the Fall 2009 and Winter 2010 infill drill program completed in the Hosco deposit area, and updates the mineral resource estimate used in the Pre-Feasibility Study for the Hosco Deposit-Joanna Gold Project, dated December 22, 2009 (the "Pre-Feasibility Study") available under the Company's profile at www.sedar.com.
  • At a cut-off grade of 0.5 grams of gold per tonne, measured and indicated mineral resources have increased by 446,000 ounces, a 35% increase when compared to the previous estimate used in the Pre-Feasibility Study and now total 1.7 million ounces of gold for the Hosco deposit only.
  • The increase comes from outside the pit outline that was determined by the Pre-Feasibility Study (259,000 ounces) and the lateral extensions between surface and a depth of 100 meters (187,000 ounces).
  • Inferred mineral resources estimates have also increased by 91,000 ounces, an 11% increase from the previous estimate.

Grade Cut-off
(Au g/t)
Category
June 2010 (1)
November 2009
Tonnes (4)
(t)
Grade
(g/t)
Gold (5)
(oz)
Tonnes
(t)
Grade
(g/t)
Gold
(oz)
0.5
Measured
Indicated
26 780 000
13 770 000
1.38
1.23
1 187 000
546 000
19 530 000
10 550 000
1.37
1.26
859 000
427 000
M + l
Inferred
40 550 000
23 170 000
1.33
1.19
1 732 000
887 000
30 080 000
20 810 000
1.33
1.19
1 286 000
796 000
1.0
Measured
Indicated
19 650 000
8 270 000
1.58
1.52
995 000
404 000
14 100 000
6 700 000
1.57
1.52
714 000
327 000
M + l
Inferred
27 920 000
14 430 000
1.56
1.42
1 399 000
658 000
20 800 000
12 550 000
1.56
1.44
1 041 000
581 000
1.5
Measured
Indicated
8 370 000
2 940 000
2.04
2.09
550 000
197 000
5 890 000
2 430 000
2.05
2.05
389 000
160 000
M + l
Inferred
11 300 000
4 110 000
2.06
1.93
747 000
255 000
8 320 000
4 010 000
2.05
1.94
549 000
250 000

Notes:
  1. Effective as of June 18, 2010.
  2. Mineral resources which are not mineral reserves do not have demonstrated economic viability.
  3. Historical production of 9,700 ounces has not been removed from mineral resources.
  4. Tonnes rounded to nearest 10,000.
  5. Ounces rounded to nearest 1,000.
The mineral resource estimate has been calculated using the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Definitions Standards for mineral resources in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

The other mineral resources on the Joanna property outside of the Hosco sector have not been updated and the mineral resource estimate figures remain the same as reported in the Pre-Feasibility Study. The following table provides the details of the total mineral resources for the Joanna Project, including the June 2010 updated Hosco mineral resources:

Mineral Resources
Sectors
June 2010
December 2009
 
Tonnes
Grade
(g/t)
Gold
(oz)
Tonnes
Grade
(g/t)
Gold
(oz)
Gain/Loss
(oz)
Measured Hosco
Héva
Alexandria
26 780 000
0
0
1.38
0
0
1 187 000
0
0
19 530 000
0
0
1.37
0
0
859 000
0
0
328 000
0
0
Indicated Hosco
Héva
Alexandria
13 770 000
4 400 000
0
1.23
1.91
0
546 000
270 000
0
10 550 000
4 400 000
0
1.26
1.91
0
427 000
270 000
0
119 000
0
0
Total Measured
and Indicated
Hosco
Héva
Alexandria
40 550 000
4 400 000
0
1.33
1.91
-
1 732 000
270 000
0
30 080 000
4 400 000
0
1.33
1.91
-
1 286 000
270 000
0
446 000
0
0
  Total Measured and Indicated
44 950 000
1.39
2 002 000
34 480 000
1.40
1 556 000
446 000
   
Inferred Hosco
Héva
Alexandria
23 170 000
9 000 000
1 100 000
1.19
1.80
1.20
887 000
511 000
42 000
20 810 000
9 000 000
1 100 000
1.19
1.80
1.20
796 000
511 000
42 000
91 000
0
0
 Total Inferred
33 270 000
1.35
1 440 000
30 910 000
1.36
1 349 000
91 000


Qualified Person and Quality Control

Information of a scientific or technical nature regarding Joanna has been prepared by or under the supervision of Ghislain Fournier P. Eng., Technical Services General Manager and Martin Demers, P.Geo., Exploration Manager of the Company. Mineral resource estimates were prepared by André Laferrière, M.Sc. P.Geo., Senior Geologist for SGS Geostat, a "qualified person" as defined by National Instrument 43-101.

Additional Information

Additional information required by part 3 of NI 43-101 can be found in the Pre-Feasibility Study and in the Mineral Resource Estimation -- Joanna Gold Deposit, November 2009 Update, dated November 9, 2009, both of which are available under the company's profile at www.sedar.com.