Ms. Eira Thomas reports

KAMINAK GOLD CORPORATION ANNOUNCES POSITIVE FEASIBILITY STUDY RESULTS ON YUKON COFFEE GOLD PROJECT

Kaminak Gold Corp. has released the results of a feasibility study prepared in accordance with National Instrument 43-101 for the company's 100-per-cent-owned Coffee gold project located 130 kilometres south of Dawson City, Yukon, Canada. The feasibility study indicates that the Coffee project represents a robust, rapid payback, high-margin, ten-year open-pit mining and heap leach project that works in the current gold price environment. As such, Kaminak intends to move forward into mine permitting to support mine construction, which is planned for mid-2018. The company is well financed ($28-million as of Sept. 30, 2015) to undertake an aggressive workplan in 2016 to meet these objectives.

At a gold price of $1,150 (U.S.) per ounce and an exchange rate of $1 to 78 U.S. cents, the Coffee project base case estimate generates an aftertax net present value at a 5-per-cent discount rate of $455-million and an internal rate of return of 37 per cent. The proposed mine will operate over an initial 10-year mine-life with average annual gold production in excess of 200,000 ounces for the first five years (excluding the initial three month ramp-up period) and average annual life-of-mine gold production of 184,000 ounces. Initial capital expenditure to finance construction and commissioning is estimated at $317-million with a life-of-mine capital cost of $478-million (including $60-million in closure costs). The all-in sustaining cash costs (as defined per World Gold Council guidelines, less corporate general and administrative expense) is estimated to be $550 (U.S.) per ounce of gold produced. The project is expected to have a significant impact on Yukon's gross domestic product, generating over $2-billion of gross revenue and contributing 480 permanent, high-paying jobs.

Eira Thomas, Kaminak president and chief executive officer, commented: "This feasibility study firmly establishes the Coffee project as one of the world's best undeveloped gold projects by value and margin that works in the current gold-price environment. The Coffee project further benefits from being a simple, open-pit, heap leach mining opportunity, situated near infrastructure that delivers low all-in sustaining costs and pays back capital in under two years." She further noted, "Kaminak feels privileged to be working in the pro-mining jurisdiction of Yukon where we enjoy strong relations with all levels of government, including our local first nations with whom we have worked alongside, collaboratively since 2010."

Accompanying this news release is a video corporate presentation given by Ms. Thomas, Kaminak president and CEO, discussing the feasibility study and available for viewing on Kaminak's website.

Furthermore, Kaminak is hosting a live question-and-answer conference call on Thursday, Jan. 7 at 11 a.m. Eastern Time (8 a.m. Pacific Time) with the Kaminak executive and feasibility study team. Participants may join the call by dialling toll-free North America 866-393-4306 or international 734-385-2616 and providing the company name to the operator. A recorded playback of the call will be available two hours after the call's completion until Jan. 21, 2016, by dialling 855-859-2056 and entering the conference ID No. 17824557, and on Kaminak's website.

Coffee project feasibility study overview

The feasibility study was initiated in July, 2014, after the release of the preliminary economic assessment in June, 2014, and commenced with infill drilling, geotechnical investigations and other fieldwork to support the study. The feasibility study was prepared and led by JDS Energy and Mining Inc., an established Yukon mine builder, in collaboration with a broad range of industry leading consultants (see contributors below).

Highlights (all currencies are reported in Canadian dollars unless otherwise specified):

• A pretax NPV (5 per cent) and IRR of $762-million and 50 per cent, respectively;
• An aftertax NPV (5 per cent) and IRR of $455-million and 37 per cent, respectively;
• A mine life of 10 years with peak annual gold production of 228,000 ounces in project year four and average, steady state, annual gold production of 193,000 ounces (years one to nine);
• 2,157,000 ounces of gold mined at head grade of 1.45 grams per tonne gold (probable mineral reserve of 46.4 million tonnes at 1.45 grams per tonne Au, containing 2.157 million ounces Au);
• 1,862,000 ounces of gold produced after average metallurgical gold recoveries of 86.3 per cent;
• Total cash cost estimated at $482 (U.S.) per ounce Au (including royalties, refining and transport) and an all-in sustaining cost (as defined by the World Gold Council, less corporate G&A) estimated at $550 (U.S.) per ounce Au, generating an operating margin of $600 (U.S.) per ounce or 52 per cent;
• Initial and sustaining capital costs, including contingency, for a 100-per-cent owner-operated mine are estimated at $317-million and $161-million (including $60-million in closure costs) respectively;
• A payback of 1.5 years pretax and two years aftertax after the commencement of first commercial gold production.

The feasibility study proposes four open pits mined by conventional shovel and truck methods at a nominal ore mining rate of five million tonnes per annum for approximately 10 years (with year one being the first full year of commercial gold production). A total of 312 million tonnes of material will be mined to produce 46.4 million tonnes of ore (strip ratio of 5.7 to one). Run-of-mine ore will be crushed to a two-inch feed size and placed on a heap leach pad. Gold will be extracted from the leachate by an adsorption-desorption-recovery carbon plant.

The site will be accessed principally from Dawson City, Yukon, by a 214-kilometre single-lane, gravel road with pullouts. The cost associated with upgrading existing road and to construct approximately 37 kilometres of new road along the proposed 214-kilometre route is estimated at approximately $25-million. Electrical power will be generated on site by diesel-powered generators. Project construction time from site mobilization to first commercial production of gold is estimated to be 18 months, excluding access road construction which will take approximately nine months.

Comparison to the June, 2014, preliminary economic assessment

The PEA presented a broadly similar operation to the feasibility study. The key differences from the PEA presented in the feasibility study include:

• Total ounces unchanged, with a shorter mine life, higher head grade, lower reserve tonnage and higher strip ratio;
• Increased average total mining rate from approximately 64,000 tonnes per day to approximately 92,000 tonnes per day;
• A ridge-top heap leach pad with a shorter initial construction period and lower capital cost per tonne of ore leached than the valley-fill impounding heap leach facility proposed in the PEA;
• An access road from Dawson City utilizing a high proportion of existing gravel roads;
• Improved economics due to a shorter construction period, shorter mine life and higher average gold grade.

Coffee gold feasibility study assumptions and economic results

The tables below summarize the various assumptions, operational parameters and economic results of the feasibility study. All money values are nominal 2015 Canadian dollars unless otherwise stated.

The following assumptions were applied only in the derivation of the aftertax valuation of the project:

• Predevelopment and sunk costs relating to the project (including but not restricted to exploration and geotechnical investigations, resource evaluation, fieldwork, metallurgical testwork, environmental and baseline studies costs, and technical studies);
• Canadian exploration expense and Canadian development expense tax pools with appropriate opening balances;
• Applicable private and Yukon Crown royalties;
• Federal and Yukon territory tax rates;
• Specific capital cost class capital cost allowance rates over the life of the project.

The following inputs were assumed for the project:

• Gold price of $1,150 (U.S.) per ounce;
• Exchange rate (U.S. dollar to Canadian dollar) of 0.78;
• Diesel price (delivered to site) of 85 cents per litre for stationary equipment and 89 cents per litre for mobile equipment.

                  FEASIBILITY STUDY OPERATING PARAMETERS

Run of mine ore delivered to heap leach (Mt)                            46.4
Run of mine ore average daily production (Kt)                             14
Run of mine ore average annual production (Mt)                           5.0
Average diluted ore grade delivered to heap leach (g/t Au)              1.45
Waste (Mt)                                                               265
Strip ratio (waste:ore)                                                5.7:1
Gold contained (Moz)                                                   2.157
Gold produced (Moz)                                                    1.862
Gold recovery (%)                                                       86.3
Average gold production years one and two (Koz per year), excluding
three-month ramp-up period                                               194
Initial capital cost (including 8.9-per-cent contingency, excluding
working capital)                                                       $317M
Sustaining capital (including 9.3-per-cent contingency and closure
costs)                                                                 $161M
Life-of-mine capital (including 9.1-per-cent contingency)              $478M
Unit operating costs (per tonne ore leached)
Mining                                                                $15.26
Processing                                                             $4.97
Site services                                                          $0.97
General and administrative                                             $2.89
Total operating costs (per tonne ore leached)                         $24.10

             ECONOMIC SUMMARY AT $1,150 (U.S.) PER OUNCE OF GOLD

Total LOM operating cash flow                                             $1.614M
Total LOM pretax free cash flow                                           $1.113M
Average annual pretax free cash flow                                        $137M
LOM income taxes                                                            $430M
Total LOM aftertax free cash flow                                           $682M
Average annual aftertax free cash flow                                       $93M
Discount rate                                                                  5%
Pretax NPV                                                                  $762M
Pretax IRR                                                                    50%
Pretax payback (after start of commercial gold production)              1.5 years 
Aftertax NPV                                                                $455M
Aftertax IRR                                                                  37%
Aftertax payback (after start of commercial gold production)            two years

             ALL-IN CASH COSTS INCLUDING SUSTAINING CAPEX

On-site mining and rehandle                                         $707M
On-site processing                                                  $230M
Surface and infrastructure                                           $45M
On-site G&A                                                         $134M
Refining                                                              $2M
Royalties                                                            $29M
Sustaining capex                                                    $100M
Closure                                                              $60M
Total                                                              $1309M
All-in cash plus sustaining cost (Canadian $/oz)(i)                   705
All-in cash plus sustaining cost (U.S. $/oz)(i)                       550

(i) All-in sustaining costs are presented as defined by the World Gold
Council, less corporate G&A. Calculated as (refining costs plus third
party royalties plus operating costs plus sustaining capital costs plus
closure capital costs) divided by payable Au ounce.

The base case set out above represents the value of the project from the known resources. The base case assumes an owner-operated open-pit mine, access to site via a gravel road (approximately 295 days per annum) and diesel power generation. Mining will take place 365 days per annum, and the heap leach pad is planned to be operated 275 days per annum with no crushing and stacking of ore occurring during January through March.

                                  SENSITIVITIES

Gold price (U.S. $/oz) (ii)   $1,000  $1,100  $1,200  $1,250  $1,300  $1,400  $1,500
Pretax NPV 5% ($M)               504     676     848     934    1021    1193    1365
Aftertax NPV 5% ($M)             295     402     509     562     616     722     828
Pretax IRR                       37%     46%     55%     59%     63%     71%     79%
Aftertax IRR                     27%     34%     40%     43%     46%     52%     58%
Pretax payback years             2.2     1.7     1.3     1.1     1.0     0.8     0.7
Aftertax payback years           2.7     2.2     1.8     1.6     1.5     1.2     1.1

(ii) At an exchange rate of $1 to 78 U.S. cents.

Opportunities to enhance value

Value-enhancing opportunities, such as contract mining, the acquisition of high-quality, second-hand mining and ancillary equipment, crushing and process plant, and accommodation quarters, will be further investigated as the project moves into detailed engineering and procurement. As operations ramp up and a greater understanding of the ore and heap leach facility performance evolves, extending the duration of the crushing/stacking period, the period and temperature of solution heating, and increasing the size of the ore feeding the heap leach pad will be evaluated. Current oil prices indicate that diesel-only power generation is the most cost-effective power option. As diesel prices increase, partial replacement of diesel with LNG (liquefied natural gas) will become more cost-effective.

There is potential for resource expansion along strike and to depth, with two existing inferred gold resources (Kona North and Sumatra), and seven separate drill discoveries in the early stages of evaluation located proximal to the proposed mine site which contain more than 25 kilometres of priority gold in soil anomalies remaining to be systematically drill-tested.

Coffee project feasibility study major components

Metallurgy

Ore samples for metallurgical testing were taken from bulk surface samples and drill core composites. A total of 40 column tests were completed at both ambient lab and simulated cold-climate temperatures, composited from 4,500 samples, representing 29,608 kilograms from 123 drill holes and eight trenches (at half-inch, one-inch, two-inch and six-inch crush sizes). In addition to column leach tests, metallurgical testing included bottle roll leaching, flotation, column percolation and drain down, multielement head assay analyses, column-leach head and tail assay screen analyses, ball mill work indices, crushing impact, and abrasion indices. Fire assays for gold and silver were also conducted. Major conclusions from the test program include:

• Coffee project ores generally leach very rapidly with low reagent consumption;
• Ore agglomeration is not required;
• Cyanide soluble assays from over 14,000 samples confirmed that cyanide soluble recovery is a reliable method to determine gold recovery;
• Differences in recovery observed between ambient lab temperature leach tests and simulate cold climate leach tests were negligible;
• Optimal gold recovery is achieved at an ore size of 80 per cent passing a 50-millimetre screen size (P80 of 50 millimetres; two inches);
• An average plant gold recovery of 86.3 per cent was determined from metallurgical testwork results and after the application of discount factors (approximately 3 per cent) to simulate plant operating conditions.

Geology and mineralization

The Coffee project area is underlain by a package of metamorphosed Paleozoic rocks of the Yukon-Tanana terrane comprising metasedimentary schist and orthogneiss which form a west-northwest plunging antiform with gently dipping limbs. The Palaeozoic sequence is intruded by mid-Cretaceous granite and younger intermediate dikes.

These units are host to gold mineralization that is hydrothermal in origin and structurally controlled, forming steeply dipping strike extensive mineralized lodes in broadly east-west-, north-south- and northeast-southwest-trending structural corridors. Mineralization is associated with both polyphase brecciation and intense sulphidation of mica-rich host rocks resulting in the formation of gold-bearing arsenian pyrite. Extensive oxidation occurred due to ingress of meteoric water downward and along the structural deformation zones. This process resulted in the oxidation of the arsenian pyrite along rims and cracks causing the release of micron-scale free gold.

Mineral resource estimate

The feasibility study is based on an indicated mineral resource estimate undertaken by Robert Sim, PGeo, an independent qualified person of SIM Geological Inc. (Kaminak news release, Sept. 23, 2015). The mineral resource estimate incorporated 1,682 diamond core and reverse circulation drill holes completed from 2010 to 2015 for a total of 280,000 metres. This estimate defines a total indicated mineral resource of 63.7 million tonnes averaging 1.45 grams per tonne Au for 2,968,000 ounces of contained gold and a total inferred mineral resource of 52.4 million tonnes at an average grade of 1.31 grams per tonne Au for 2,212,000 ounces of contained gold. These mineral resources are inclusive of mineral reserves. Cut-off thresholds used in the resource estimate reflect the projected metallurgical characteristics at various degrees of oxidation: 0.3 gram per tonne Au for oxide and upper transition, 0.4 gram per tonne Au for middle transition, and at one gram per tonne Au for lower transition and sulphide types.

A series of resource block models, covering the limits of the four deposit areas, were produced with gold grades estimated by ordinary kriging into model blocks measuring 10 metres along strike, 2.5 metres across strike and five metres in the vertical dimension. A capping strategy was employed to control the effects of potentially anomalous, high-grade, sample data during block grade interpolation. The ratio of cyanide soluble gold verses total gold content was utilized to assign the various oxide ore types in the block models. Mineral resources are classified according to their proximity to sample locations and are reported according to the CIM (Canadian Institute of Mining, Metallurgy and Petroleum) definition standards for mineral resources and mineral reserves.

Mineral reserve estimate

The mineral reserve for the property was estimated by Dino Pilotto, PEng, an independent qualified person of JDS.

Cut-off grades, ranging from 0.27 gram per tonne to 1.40 grams per tonne, were determined for each deposit and ore type and based on appropriate mine design criteria and the adopted mining method. The mineral reserves were estimated at a gold price of $1,200 (U.S.) per ounce and an exchange rate of $1 to 87 U.S. cents, with the application of dilution and recovery factors appropriate to an open-pit mining method. The factors applied to generate the pit shells were the best estimate of gold price and exchange rate at the time the pit shells were generated. These factors were not those utilized to generate the final project economics, but reserve estimates using the lower gold price and exchange rate indicate that there were not any material differences. Pit optimizations and analyses were conducted to determine the optimal mining shells.

As input to the initial pit limit optimization and subsequent mine scheduling, and, in order to reflect the selectivity of the mining method chosen when compared to the block model parameters, an external mining dilution was calculated and applied for each of the various deposits. This external mining dilution was based on a calculation of the number of waste blocks adjacent to an ore block in the mineral inventory block model. Only blocks which were contained within the resource classification of indicated and above the given gold cut-off grade were considered as ore blocks.

Probable mineral reserves are estimated at 46.4 million tonnes at 1.45 grams per tonne Au, containing 2.157 million tonnes Au.

Mining

An open-pit, shovel and truck mining method was applied to the Coffee project deposits. Mining is scheduled at the start of year one in order to ensure the delivery of a minimum of 3.5 million tonnes of ore to the heap leach pad prior to the first winter shutdown and to provide sufficient quantities of waste material to facilitate construction activities. Mining of the deposit is planned to produce a total of 46.4 million tonnes of ore and 265 million tonnes of waste (5.7-to-one strip ratio) over a 10--year project production life, including the initial year of preproduction. Mining is planned to continue throughout the year. During the crusher and heap leach shutdown in the first three months of each year uncrushed ore will be stockpiled. The mine plan focuses on achieving consistent annual total material production rates of between 34 and 40 million tonnes, while ensuring a steady-state ore production rate of five million tonnes per annum.

The Supremo pit contributes approximately 71 per cent (32.9 million tonnes) of the total ore and commences mining in year two of the project. It is planned to remain in production to the end of mine life. The Latte (25 per cent, 11.5 million tonnes), Double Double (2 per cent, 1.1 million tonnes) and Kona (2 per cent, 900,000 tonnes) pits will contribute early production and will be completed by year three. This schedule endeavours to prioritize the early production of higher value material where practical.

Open-pit mining operations will use a fleet comprising industry-standard 16-cubic-metre shovels, 12-cubic-metre front-end loaders, four-cubic-metre excavators and 144-tonne haul trucks. This fleet will be supplemented by appropriately sized drills, graders and dozers. A five-metre bench height was selected for mining in ore and waste with overall 20-metre effective bench heights based on a quadruple-bench configuration. The handling of the fine ore from the crusher to the heap leach pad is included in the open-pit scheduling and operating cost estimation.

Waste rock will be placed in three engineered waste rock facilities proximal to the pits from which the waste is sourced. Some waste rock will be backfilled into mined out pits at Latte, Supremo and Double Double in order to create causeways and facilitate ore haulage routes to the crusher. Waste rock from the Kona pit, due to its geochemical characteristics, will be placed in a temporary waste rock facility adjacent to the pit during mining and then backfilled into the mined-out Kona pit.

Processing

The process includes a two-stage crushing plant feeding a heap leach operation. Gold is extracted by an adsorption-desorption-recovery carbon plant. The process is based on a heap leach processing rate of five million dry tonnes per year at an average feed grade of 1.45 grams per tonne and an anticipated overall recovery of 86.3 per cent. The crushing rate will be approximately 18,200 tonnes per day over the nine-month operating period. The process plant, located in close proximity and at a lower elevation to the heap leach facility, minimizes pumping by allowing gravity feed of pregnant solution.

Crushed ore will be trucked to the heap leach facility and spread by dozer. Crushing and heap leach stacking will be suspended between January and March in order to maintain the thermal integrity of the heap. The heap leach facility will operate all year with the solution heated as necessary to maintain thermal integrity. The facility will be stacked progressively, in well-defined stages, from the east to the west.

Ore leaching will commence in the third quarter of year one. At the end of the fourth quarter, approximately 3.5 million tonnes of ore will be available for leaching. Gold recovery will continue through the first quarter of year one, and ore crushing and stacking recommence in the second quarter of year one. Progressive closure of the heap leach pad will commence in year four as depleted areas of the facility become available for decommissioning, covering and reclamation. The seasonal placement of synthetic geomembrane covers will aid in maintaining the thermal profile and controlling precipitation run-off.

Process water for leaching will be sourced from site contact water exclusively, except at the start of operations when a small amount of water may be sourced from surrounding creeks. Event and rainwater storage ponds will be constructed between the heap leach pad and the process plant.

Infrastructure and project execution

The following key infrastructure will support the mine and process facilities:

• A 214-kilometre access road from the Klondike Highway turn-off 15 kilometres east of Dawson City, utilizing and upgrading existing roads where possible and requiring only approximately 37 kilometres of new road construction to connect portions of existing isolated road. The Stewart and Yukon rivers will be crossed by barge in summer and ice roads in winter. During the fall freezing and spring breakup periods, each approximately six and four weeks, respectively, the site will not be accessible by road. On-site storage for consumables accommodates a period of up to 10 weeks without site access;
• A 1,200-metre gravel airstrip;
• Truck workshop, warehouse, administration and camp accommodation;
• Bulk explosives storage and magazines;
• Power plant (installed capacity of nine megawatts), initially diesel-fired but capable of partial LNG substitution;
• Diesel bulk storage tanks (for power generation, mining equipment and ANFO (ammonium nitrate/fuel oil)) with a 10-week capacity;
• Potable water, fire water and sewage treatment systems;
• Potable water to be trucked from the Yukon River.

                      PROJECT OPERATIONAL TIMELINE

Project year   Project activities

Year 3         road construction starts
Year 2         Q1 to Q2: delivery of equipment, infrastructure, and consumables
               Q3 to Q4: infrastructure earthworks, camp and facility construction;
               prestripping starts
Year 1         Q1: crusher and process plant construction begins; mining begins
               Q3: heap leach pad loading commences; leaching begins late Q3
               Q4: first commercial gold production begins
Year 1         first full year of operations and commercial gold production

Total manpower complements during construction and operations are estimated to peak at 480 and 435, respectively. During construction a peak, on-site labour force of 250 is anticipated. The peak, on-site operational labour complement is anticipated to be 225. Personnel will generally operate on a two-week-on-two-week-off shift rotation on a fly-in-fly-out basis.

Contributors

The feasibility study was undertaken and led by JDS Energy and Mining, under the direction of project lead, Angus Christie, PhD, (JDS) with oversight and contributions from James Scott, MSc, PGeo (advanced projects manager at Kaminak) and Fred Lightner, PE (director of mining at Kaminak).

The following organizations contributed to the feasibility study:

Discipline                                 Responsible consultant

Project management, mining, reserve        JDS Energy and Mining Inc.
estimation, process engineering,
infrastructure and financial modelling
Geological modelling and resource          Sim Geological Inc.
estimation
Metallurgical testwork                     Kappes, Cassiday & Associates
Crushing and abrasion testwork             ALS Canada
Geomechanical and geotechnical             SRK Consulting (U.S.) Inc.
Heap leach facility                        RRD International Corp. and The
                                           Mines Group Inc.
Water balance, geochemistry and source     Lorax Environmental Services Ltd.
terms
Water management                           SRK Consulting (Canada) Inc.
Access road                                JDS Energy and Mining Inc. and
                                           Onsite Engineering Ltd.
Permafrost                                 Tetra Tech EBA

Next steps

With the results of the feasibility study now in hand, Kaminak will begin advancing the project through the permitting process in Yukon. The project will be subject to an environmental and socio-economic assessment under the Yukon Environmental and Socio-economic Assessment Act, administered by the Yukon Environmental and Socio-Economic Assessment Board. Kaminak has assembled a team of experts to assist the company in the development of a project proposal which the company plans to submit to YESAB in the third quarter of 2016. Once through YESAB's adequacy review, the company will submit applications for a quartz mining licence and water licence, the two major licences required for the construction and operation of a mine.

Kaminak's disclosure of a technical or scientific nature in this press release has been reviewed and approved by Mr. Scott, MSc, PGeo, advanced projects manager for Kaminak Gold, who serves as a qualified person under the definition of NI 43-101.

The technical information in this press release for the Coffee project is based on the following technical report: technical report and feasibility study for the Coffee project, 2016, Gord Doerksen, PEng, Mr. Christie, Mr. Pilotto, PEng, Kelly McLeod, PEng, Trevor Herd, Victoria Viveash, Rob Sim, PGeo, Mike Levy, PE, Anthony Crews, PE, David Flather, and Tom Sharp, PEng.

The authors of the feasibility study are independent of the company and are qualified persons for the purposes of NI 43-101.

The technical report will be filed under the company's profile on or before Feb. 19, 2016, on SEDAR.

Mr. Sim, PGeo, consultant to the company and a qualified person as defined by NI 43-101, has reviewed and approved the contents of this news release related to the mineral resource estimate. The mineral resource estimate referenced in this press release was prepared in September, 2015, by Mr. Sim, PFeo, an independent qualified person as defined by NI 43-101.

Mr. Pilotto, PEng, of JDS Energy and Mining, a consultant to the company and a qualified person as defined by NI 43-101, has reviewed and approved the contents of this news release related to the mineral reserve estimate. The mineral reserve estimate referenced in this press release was prepared in December, 2015, by Mr. Pilotto, PEng, an independent qualified person as defined by NI 43-101.

We seek Safe Harbor.