Mr. Chris Richter of AuRico reports

AURICO METALS TO ACQUIRE KISKA METALS

AuRico Metals Inc. and Kiska Metals Corp. have entered into a definitive arrangement agreement, pursuant to which AuRico will acquire all of the issued and outstanding securities of Kiska by way of a statutory plan of arrangement under the Business Corporations Act (British Columbia).

Under the terms of the agreement, the holders of common shares of Kiska, other than AuRico, will receive approximately: (i) 0.0667 of an AuRico common share plus (ii) 1.6 cents in cash for each Kiska share held. Based on AuRico's Dec. 22, 2016, closing share price, the arrangement values the Kiska shares at approximately 7.8 cents per share. The total value of this arrangement is approximately $9.6-million. The number of AuRico shares to be issued as part of the arrangement is approximately 8.2 million, assuming conversion of Kiska's in-the-money options and warrants, representing approximately 5.5 per cent of the current issued and outstanding AuRico shares.

Arrangement highlights

Key benefits to Kiska securityholders (defined below):

• Premium to Kiska shareholders: The arrangement provides an immediate and significant premium to recent trading ranges of Kiska shares, being a premium of 95 per cent to Kiska's closing share price on the TSX Venture Exchange on Dec. 22, 2016, and a 70-per-cent premium on the basis of Kiska's and AuRico's respective 20-day volume-weighted average prices as of the same date, and also provides shareholders with significantly enhanced trading liquidity;
• Complementary high-quality assets: The combined company will have paying royalties focused on Tier 1 jurisdictions, the Kemess development project in British Columbia, which is well advanced with a feasibility study recently released and an environmental assessment certificate expected in the near term, and a large high-quality portfolio of earlier-stage royalties and exploration projects with royalty-generation potential;
• Exciting platform: Participation in an exciting new platform, positioned to create securityholder value through the advancement of Kemess, and further development of a strong royalty and project pipeline;
• Diversification: The combination of Kiska's projects and royalties with the advanced-stage Kemess project and AuRico's five paying royalties provides excellent asset diversification for securityholders;
• Growth potential: Enhanced ability to transact on accretive acquisitions, and grow the royalty and project portfolio.

Key benefits to AuRico shareholders:

• Royalty diversification and long-term optionality: Kiska's royalty portfolio consists of six existing royalties, including royalties on the East Timmins and Boulevard properties operated by Kirkland Lake Gold and Independence Gold, respectively. In addition, Kiska's six wholly owned exploration projects present organic royalty-creation opportunities. All assets are located in North America and are expected to further enhance AuRico's existing high-quality royalty pipeline.
• Near Kemess exploration upside: The arrangement would add several new wholly owned exploration properties, many of which are located in British Columbia, including the Kliyul project which is located approximately 50 kilometres south of AuRico's 100-per-cent-owned Kemess project. These properties present AuRico with organic royalty-creation opportunities in the context of property partnership or divestitures.
• Strong balance sheet and other financial synergies: The arrangement is expected to further strengthen AuRico's financial position as well as provide administrative and tax synergies going forward.

Chris Richter, president and chief executive officer of AuRico, stated: "This transaction presents a unique opportunity to expand our royalty portfolio with a focus on Canadian assets. We are confident that this transaction represents a significant value-creation opportunity, and we are very pleased to bring this transaction forward to the benefit of both sets of shareholders."

Grant Ewing, president and CEO of Kiska, stated: "We are excited to enter into this agreement, as it offers Kiska shareholders an immediate and significant premium to the market, and results in excellent diversification for securityholders by combining an early-stage portfolio of royalties and projects with a high-quality suite of paying royalties and an advanced development asset in Kemess."

Additional information regarding the arrangement

The arrangement agreement includes standard non-solicitation and superior proposal provisions, and Kiska has provided AuRico with certain other customary rights, including a right to match competing offers. Full details of the arrangement will be included in Kiska's management information circular to be mailed to Kiska securityholders (Kiska shareholders, and the holders of options of Kiska and warrants of Kiska), in due course.

The arrangement is subject to customary closing conditions, including the approval by the Kiska securityholders, as well as court and regulatory approvals. Assuming the timely receipt of such approvals, the arrangement is expected to close in the first quarter of 2017.

A copy of the agreement will be filed under Kiska's profile on SEDAR.

Support for the arrangement and fairness opinion

Prior to entering into the agreement, the board of directors of Kiska received a verbal fairness opinion from Primary Capital Inc., to the effect that, as of the date thereof, based upon and subject to the assumptions, limitations and qualifications in the fairness opinion, the consideration to be received pursuant to the arrangement is fair, from a financial point of view, to Kiska shareholders (other than AuRico). Kiska expects to receive a written fairness opinion from Primary Capital prior to mailing the management information circular to Kiska securityholders.

The Kiska board, after receiving financial and legal advice, and following receipt of the fairness opinion, unanimously determined that the arrangement is fair to the Kiska securityholders and that the arrangement is in the best interests of the company, and recommends that Kiska securityholders vote in favour of the arrangement.

In addition, prior to entering into the agreement, AuRico entered into support and voting agreements with Kiska's management and the Kiska board, collectively holding approximately 7.3 per cent of the issued and outstanding Kiska shares, whereby the locked-up shareholders have agreed to vote their securities in favour of the arrangement at the special meeting of Kiska securityholders.

The AuRico board of directors has unanimously approved the arrangement.

Private placement transaction

In connection with the arrangement, AuRico and Kiska have also agreed that AuRico will subscribe for approximately 12.9 million Kiska shares on a private-placement basis, representing approximately 9.9 per cent of the outstanding Kiska shares after giving effect to the private placement. The Kiska shares will be acquired at a price of 5.5 cents per share, for total gross proceeds to Kiska of approximately $709,500. Completion of the private placement is subject to the satisfaction of certain regulatory requirements but is not contingent on completion of the arrangement.

Kiska securityholder approval

Completion of the arrangement will be subject to customary closing conditions, including receipt of the required approvals at a special meeting of Kiska securityholders expected to be held in February, 2017. The arrangement will be subject to the approval of (i) at least two-thirds of votes cast by Kiska securityholders (voting as a single class and excluding Kiska warrants that will expire in accordance with their terms prior to the meeting); (ii) at least two-thirds of the votes cast by Kiska shareholders (voting together as a single class); and (iii) if required by Multilateral Instrument 61-101 -- Protection of Minority Securityholders in Special Transactions, minority approval in accordance with Section 8.1 of MI 61-101.

Advisers and counsel

Osler, Hoskin & Harcourt LLP is acting as legal counsel to Kiska, and Primary Capital Inc. is acting as the exclusive financial adviser to Kiska. Fasken Martineau DuMoulin LLP is acting as legal counsel to AuRico.

About Kiska

Kiska employs the royalty-and-project-generator business model to finance exploration, leverage exploration dollars and data, and preserve shareholder equity. Kiska partners its projects with mining and exploration companies which share its vision and commitment with respect to environmentally and socially responsible mineral exploration and development. Kiska holds a high-quality portfolio of gold and copper projects throughout North America, large technical databases, and an extensive royalty portfolio.

About AuRico

AuRico is a precious metals royalty and mining development company with producing gold royalty assets including a 1.5-per-cent net smelter return royalty on the Young-Davidson gold mine, a 0.25-per-cent NSR royalty on the Williams mine at Hemlo and a 0.5-per-cent NSR royalty on the Eagle River mine -- all located in Ontario, Canada. AuRico Metals also has a 2-per-cent NSR royalty on the Fosterville mine and a 1-per-cent NSR royalty on the Stawell mine, located in Victoria, Australia. Aside from its diversified royalty portfolio, AuRico wholly owns the advanced Kemess gold-copper project in British Columbia, Canada.

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