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West Kirkland Mining Buys 1.1% NSR Royalty at Hasbrouck in Exchange for TUG Project Interests

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West Kirkland Mining Buys 1.1% NSR Royalty at Hasbrouck in Exchange for TUG Project Interests

West Kirkland Mining Buys 1.1% NSR Royalty at Hasbrouck in Exchange for TUG Project Interests

VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 9, 2017) - West Kirkland Mining Inc. (TSX:WKM)(OTCQB:WKLDF) ("West Kirkland" or the "Company") announces the execution of an exchange agreement (the "EA") with Newmont Mining Corporation ("Newmont") whereby the Company has exchanged all of its rights, title and interests in, and its obligations associated with the TUG Property, located within the Long Canyon Trend of northern Nevada/Utah, for an approximate 1.1% net smelter returns ("NSR") royalty forming part of Newmont's 2.4% NSR royalty on the Hasbrouck Gold Project, located near Tonopah, Nevada, plus the right to US$1.194 million in payments due upon commercial production at Hasbrouck or Three Hills and extinguishment of land fees. The Hasbrouck Gold Project is held by a dedicated limited liability corporation ("LLC") of which the Company holds a 75% interest and of which Clover Nevada LLC, a Nevada LLC wholly-owned by Waterton Precious Metals Fund II Cayman, L.P., holds a 25% interest.

The Company now owns for its own account approximately a 1.1% NSR royalty, or 31.4% of the existing 3.5% NSR royalties on the Hasbrouck Gold Project. The existing NSR royalties are over claims hosting the proven and probable reserves and have not been altered by way of this transaction.

A September 2016 Updated Pre-Feasibility Study (the "PFS Update") was prepared for the Hasbrouck Gold Project (see "Technical Report and Updated Preliminary Feasibility Study: Hasbrouck and Three Hills Gold-Silver Project, Esmeralda County, Nevada," dated September 14, 2016 and prepared by Thomas L. Dyer, P.E., Paul Tietz, C.P.G., Ryan T. Baker, Herbert C. Osborne and Carl E. Defilippi). Using the PFS Update financial model, the attributable Hasbrouck cash flow acquired by the Company pursuant to the EA is US$9.5 million over the eleven-year project life. At a 5% discount rate, this attributable cash flow amounts to approximately US$7.8 million.

At the holding LLC level (75% owned by West Kirkland), the PFS Update estimated a US$120 million NPV (5%) and a 43% IRR, after-tax, with a 3.1 year pay-back at US$1,275/oz Au and US$18.21/oz Ag metal price assumptions. The 1.1% NSR royalty acquired by the Company would add to the Company's share of this modelled value.

West Kirkland's CEO, R. Michael Jones, stated, "We are very pleased to complete this transaction with Newmont. Although we believe the TUG Property to be highly prospective, at current gold prices the known deposit is not economic. By comparison, the acquisition of a 1.1% NSR royalty on the Hasbrouck Gold Project plus US$1.194 million in payments and eliminated land fees is very accretive to West Kirkland at today's gold prices. We also see good exploration potential at Hasbrouck and the transaction is attractive across all of the large land position where recent drilling has been successful."

The PFS Update estimated open pit proven and probable reserves for 100% of the Hasbrouck Gold Project (based on 100% of the project) totalling 45.3 million tons at a grade of 0.017 oz/ton gold and 0.233 oz/ton silver, containing 762,000 oz gold and 10.6 million oz silver. These reserves were used in the PFS Update and the royalty value model.

Hasbrouck Gold Project Reserves - June 3, 2015, Mine Development Associates ("MDA")
Three Hills K tons Grade

(oz Au/ ton)
K oz Au oz Ag/ton K oz Ag
0.005 opt

Au cut-off
Proven - - - - -
Probable 9,653 0.018 175 - -
P&P 9,653 0.018 175 - -
Hasbrouck
Variable

(see note 3 below)
Proven 6,242 0.020 127 0.410 2,562
Probable 29,374 0.016 461 0.273 8,007
P&P 35,617 0.017 588 0.297 10,569
Total Hasbrouck Gold Project
Variable

(see note 3 below)
Proven 6,242 0.020 127 0.410 2,562
Probable 39,028 0.016 635 0.205 8,007
P&P 45,270 0.017 762 0.233 10,569

Notes:

  1. The estimation and classification of proven and probable reserves have been prepared by Thomas L. Dyer, P.E., of MDA following CIM standards.
  2. Reserves are estimated based on US$1,225/oz gold and US$17.50/oz silver.
  3. Cutoff grades used for reserves are: Three Hills 0.005 oz Au/ton, Hasbrouck Upper Siebert 0.008 oz Au/ton, and Hasbrouck Lower Siebert 0.007 oz Au/ton.
  4. It is MDA's opinion that the sampling, assaying, and security procedures used at Three Hills and Hasbrouck follow industry standard procedures, and are adequate for the estimation of the current Mineral Reserves.
  5. MDA completed audits of the database, performed a site visit, reviewed QAQC data and confirmed historic assays. After performing their review, they consider the assay data to be adequate for the estimation of the current Mineral Reserves.
  6. MDA has reviewed and verified the data disclosed in the above table to be in conformity with generally accepted CIM "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines in accordance with NI 43-101.
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