National Mining Competition:

Academic Case 2013

Strengthening relationships through responsible development.
National Mining Competition: Academic Case / page i
Table of Contents
National Mining Competition: Academic Case 2013 ................................................. 1
Appendix 1 Financial Statements ........................................................................... 7
Appendix 2 Stock Price Chart ................................................................................. 9
Appendix 3 Mineral Reserves............................................................................... 10
Appendix 4 Claim Maps........................................................................................ 11


KPMG is proud to be the Academic Sponsor for the 2nd Annual National Mining Competition.

Our Saskatoon team spent many hours sharing their knowledge to assist with this
academic case competition. We hope students leave with a better understanding of
the complexities in the global mining industry.

Have fun and good luck!

National Mining Competition: Academic Case / page 1
National Mining Competition:
Academic Case 2013
Case Overview
NorthRush Resources (NorthRush) is a fictional mining exploration company engaged in gold
exploration in Nunavut, Canada. As of November 1
st
2013, NorthRush has identified three gold
deposits in various regions of Nunavut as being potentially viable for a new mine. NorthRush
Resources has limited capital to invest in new projects, and is now faced with a decision on which
deposit, if any, to pursue further.
As a team of consultants hired by NorthRush, your task is to evaluate the various options available to
NorthRush and recommend a plan of action. NorthRush is expecting a complete development plan
for the recommended projects mine, processing facility and supporting infrastructure.
Company Background
History & Values
NorthRush is a Canadian mining exploration company headquartered in Saskatoon, Saskatchewan.
NorthRush is experienced in the exploration of gold resources in Northern Canada and is now
seeking to transition into development with one of its mineral assets. The company has an
experienced management team who have been involved in the development of various mining
projects across Canada while working for other more senior companies in the past, but requires help
from you as a consultant due to staffing limitations.
NorthRush values responsible development that is respectful of local inhabitants and the
environment. The company aims to involve local stakeholders across all aspects of their operations
and to develop meaningful relationships built upon ethical decision making principles; they strive to
lead the industry in standards for safety, environmental management and community involvement.
The company expects these values to be reflected throughout all components of a recommendation
to the company.
Financial Structure
NorthRush Resources is a publically traded company on the TSX Venture Exchange (TSXV:NRSR).
NorthRush seeks to provide its shareholders with a significant return on investment. The companys
initial projections indicate that their various mineral deposits contain significant upside potential upon
development and it is expected that this will transfer to long term increases in shareholder value.
Future Outlook
NorthRush is focused on long-term development of its mineral resources. The company is assessing
the feasibility of investing significant capital in a Northern project that will become the companys

National Mining Competition: Academic Case / page 2
primary focus. Currently, the global mining industry is challenged by weak financial conditions and
this reduces firms ability to raise capital for projects. Although the company recognizes the risks
associated with northern development and the financing challenges, they maintain the belief that the
opportunity will prove rewarding in the long term.
Mineral Resources
NorthRush Resources has access to three mineral claims in Nunavut. Each claim is in a different
region of Nunavut and each presents a number of unique challenges. An engineering team has
conducted technical assessments of the claim sites to determine the reserves contained within each
deposit. As each claim contains considerable gold reserves, it is expected that each holds a
significant market value.
Baker Lake Claim
This claim is located in the Kivalliq region of Nunavut. Baker Lake is the closest municipality, located
approximately 61 km south west of the claim. Notable mining projects in the area include Agnico-
Eagles Meadowbank gold mine, which is the only mine in operation in Nunavut. Additionally, AREVA
Resources proposed Kiggavik uranium mine site is also located in this area.
The technical assessment of the Baker Lake claim has identified near surface gold reserves that can
easily be extracted with an open-pit mine design. The assessment found that the gold ore is
contaminated by arsenic residue. The engineering team that completed the assessment determined
that 1.1kg of arsenic trioxide will be extracted per tonne of ore. The engineering team expects this to
increase the operating and capital costs of a processing facility to address the arsenic residue
relative to comparable projects. Extra steps will need to be taken to convert the arsenic to a form
that is safe for disposal and to prevent any groundwater contamination from the facility.
Location: 6436'26.28"N, 9456'29.53"W
Bathurst Inlet Claim
This claim is located in the Kitikmeot region of Nunavut. The nearest location with established
services is Cambridge Bay, which is located 234 km north east of the claim. Transportation from
Cambridge Bay is challenging, as the claim is located across a significant channel of water, making
the claim only accessible by air or by sea.
The technical assessment of the Bathurst Inlet Claim has identified near surface gold and silver
reserves. The mineral reserves have been determined to be extractable with a near surface open-pit
mine. The ore has been determined to have a low amount of impurities.
The silver reserves will provide another source of revenue if mined and processed. However, the
engineering team that completed the assessment expects additional costs to factor into the
processing facility to separate the gold and silver ores.
Location: 6736'0.74"N, 10859'23.31"W

National Mining Competition: Academic Case / page 3
Iqaluit Claim
This claim is located in the Qikiqtaaluk region of Nunavut. Iqaluit, Nunavuts capital city, is located
approximately 110 km south east of the claim. This claim is in close proximity to Iqaluit, which has
many services readily available. Having access to these services will provide a source for the
supplies, labour and other inputs necessary for the construction and service of a mining project.
Developing a mining project close to Iqaluit will require communications with multiple stakeholder
groups that may be affected by the project. In addition, there is a possibility that a project may face
greater regulatory oversight and potential resistance to the project from the local community.
The technical assessment of this claim has identified significant gold reserves. The engineering team
has concluded that an underground mine will have to be developed to extract these reserves and
that the cut-and-fill stopping mining method will be the most cost effective given the geological
nature of the reserve. The gold reserves are of the highest grade in this deposit; however, there is a
possibility that the mine development time and costs will be greater for an underground mine.
Location: 6443'56.58"N, 6827'6.04"W
Processing Facility
Each mineral claim will require the development and construction of a processing facility. It is
necessary to determine the most appropriate method of extracting the resource from the ore body,
to determine the cost of building the facility and its operational costs, to analyze the environmental
impacts of the processing procedure and to estimate the resource recovery rate. These factors are
largely dependent on the mineral claim selected. Comparable company disclosures are a very useful
method for forming a basis for these cost estimates.
Management of NorthRush Resources has previously discussed utilizing gravity circulation, heating,
heap leaching and flotation processing methods. However, the team believes that other methods or
a combination of familiar methods may be best suited to the remote arctic climate and sub-zero
temperatures. The team is also concerned about potential environmental impacts associated with
chemical solution based extraction methods.
Infrastructure Requirements
Constructing and operating a mine and processing facility will require extensive infrastructure
development. The NorthRush team has already identified a need for site accommodations, water
supply, a tailings management area, a waste rock facility and an administration centre. The
NorthRush team has indicated that they expect you to evaluate the need for these, identify other
necessary site requirements and incorporate them into your final recommendation.
One area the NorthRush management team has expressed concern over is the power supply for the
project. None of the mineral deposits have direct access to any immediately available power sources
and all potential projects are expected to have large energy requirements. The NorthRush team is
familiar with utilizing diesel generated power; however, the remoteness of the mineral deposits is
expected to have a significant impact on diesel transportation costs. The NorthRush team wants you
to evaluate the energy potential, cost and feasibility of powering a project through alternative energy

National Mining Competition: Academic Case / page 4
sources. Examples of potential sources may include wind power and portable nuclear generators,
although other sources do exist.
Northern Projects
Resource development in Nunavut has proved challenging due to a lack of infrastructure. There are
few all-season roads and many in existence have been developed for private use. Most communities
are only accessible by air or sea and have government operated airports.
Development of an operational mining project will require logistical planning for the transportation of
capital goods, employees, fuel, large equipment and machinery. An operational mine will require
access to transportation for the supplies, employees and for mineral output. The degree of this
challenge varies depending on the location of each mineral claim. Of NorthRushs three mineral
claims, each is accessible by different forms of transportation and this will factor into all logistics
planning. Other northern mining projects have developed winter roads, all-season roads or on-site
airports to accommodate transportation needs.
The harsh arctic climate is also a considerable challenge for companies operating in the region. Along
with extreme temperatures, it is necessary to plan for limited seasonal daylight hours. During the
exploration phase, NorthRush was able to operate only 2 months of the year using temporary
camps. While some companies in the area have developed camps that facilitate year-round
operation, they come at a substantial cost. Other companies have implemented three season camps
with less capital intensive investment requirements.
One of the principle challenges of mine development in Nunavut is the availability of skilled labour.
Skilled labourers will need to be flown in from distant locations or will have to be trained from the
local populations. Constructing a new mine facility is a labour intensive process that will require a
large volume of workers.
The remote accessibility of NorthRushs resources affects several aspects of potential project
development. The NorthRush management team expects this to translate into greater costs of all
construction and operations based inputs.
Local Stakeholders
Development in Northern Canada must be done in partnership with all local communities. There are
three regions in Nunavut, the Kitikmeot, Kivalliq, and the Qikiqtaaluk regions. Each region has its
own cultural practices, customs and regulations that must be followed. In the past, many mining
companies have experienced tension with Inuit communities that are directly affected by the
operations of mining and exploration companies. It is critical for all companies operating in these
areas to be aware of the various groups and their unique cultural sensitivities. Due to this, the
NorthRush team is concerned about how the company can both engage and positively affect the
local communities.


National Mining Competition: Academic Case / page 5
Regulatory Issues
In Nunavut, all proposed mining projects must receive approval from the Nunavut Impact Review
Board. Nunavut is host to its own varying environmental rules and regulations that must be
considered in all mining development plans. Special consideration must also be placed on the Inuit
Qaujimajatuqangit (IQ). This traditional value system is essential to managing the environmental and
social impacts that any project may have on the Inuit way of life.
The NorthRush management team is inexperienced in operating under the regulatory environment in
Nunavut. Therefore, they have requested an overview of the approval process and the associated
timelines. It is also essential to identify the differences in regulations, land and mineral rights
between the three Nunavut regions. Identifying difficulties experienced by miners in the past may
prove useful in assessing risk to the proposed project.
Environment
Responsible environmental management is critical in all Nunavut based mining projects. Key
environmental issues that the NorthRush management team have identified include tailings and
waste management, water management and mine site reclamation. NorthRush acknowledges that
other environmental issues will exist in relation to the type of mine developed, mineral processing
methods, energy use and chemical contamination from mineral processing. The NorthRush team
expects the final development plan to minimize the projects environmental impact.
Raising Capital
As a mining exploration company, NorthRush Resources relies on external financing to fund their
operations and investment activity. Financing a new mine will require NorthRush to raise significant
capital. In the NorthRush Management teams experience, capital costs on new construction can
reach several billion dollars. Furthermore, it is unclear how the remote accessibility of NorthRushs
claims will impact cost estimates.
While NorthRush Resources is considering utilizing traditional sources of capital such as debt and
equity, they have also expressed interest in several alternative means, such as metal stream
financing, royalty financing and joint ventures. The NorthRush management team is looking for
insight into a financing solution that will be best suited to the financial structure of their company
and the fundamentals of their future projects.
To successfully raise financing, Northrush will require financial projections and a valuation of the
proposed project. NorthRushs management suggests that the operating and capital costs for any
projections be based on comparable company projects already completed. Such information is often
readily available in the form of technical reports on security filing websites such as SEDAR, or on the
comparable companies websites.
It is important to consider the level of risk associated with a northern based mining project. Because
mining projects in Nunavut are faced with many challenges, financial evaluation of the chosen
project should consider a risk premium. NorthRushs management has historically applied a discount
rate of 15% 35% to discount projected cash flows from various mining projects. This range may
require adjustment to accommodate the risk of a Nunavut mine.

National Mining Competition: Academic Case / page 6
Additionally, an expectation for future gold prices will be required in evaluating the feasibility of any
project. Northrush management is expecting you, as strategic consultants, to provide advice on the
future of the gold market relative to the expected timing of the chosen project.
Development Timelines
The NorthRush Resources management team is looking for perspectives on an operational start-up
strategy. Construction can be coordinated to bring a new mine and processing facility to completion
and full capacity at once. Alternatively, construction planning can accommodate a phased start-up
that will allow NorthRush to expand production later in the mines life.
Closing
NorthRush Resources currently has an exciting opportunity to transition from a mining exploration
company into a gold producing company. However, NorthRush Resources needs your expertise to
evaluate their investment opportunities. It is important to consider the gold price outlook, global
financial conditions and overall challenges of mining in Nunavut.
NorthRush Resources has hired you, as strategic consultants, to evaluate the various options
available to NorthRush and recommend a plan of action. NorthRush is expecting a comprehensive
development plan for the recommended projects mine, processing facility and supporting
infrastructure. In completing the development plan it is critical to complete the following tasks:
Select a mineral claim based on its respective pros and cons (if appropriate);
Determine the most effective method of processing the mineral ore;
Estimate costs of mine and processing facility construction;
Identify the required supporting infrastructure needs;
Develop a plan and timeline to coordinate logistics of transportation, human resources and mine
operations;
You should also consider:
Critical stakeholders and develop a community engagement strategy;
Outlining the developments regulatory approval process and appropriate timelines;
Incorporating strategy to minimize the projects impact on the environment;
Ultimately, you should assess the projects for viability, profitability, environmental and social
impacts.
Research Resources
Nunavut Impact Review Board: http://www.nirb.ca/index.html
SEDAR: www.sedar.com
Kivalliq Inuit Association: http://www.kivalliqinuit.ca
Aboriginal Affairs and Northern Development Canada: http://www.aadnc-
aandc.gc.ca/eng/1100100036000/1100100036004

National Mining Competition: Academic Case / page 7
Appendix 1 Financial Statements
Income Statements
Balance Sheet


(In thousands)
Statement of Earnings 2010 2011 2012
Exploration and evaluation 30,400 27,350 31,250
Corporate development 3,450 3,560 3,550
Administration 9,560 10,050 11,240
Other 550 600 570
Impairment of E&E asset - - 40,000
Loss before finance income and costs 43,960 41,560 86,610
Finance income net of costs 430 400 370
Total loss before tax 44,390 41,960 86,980
Tax - - -
Total loss after tax 44,390 41,960 86,980
(In thousands)
Current Assets 2010 2011 2012
Cash and cash equivalents 111,302 81,206 76,504
Accounts receivable and prepaid assets 8,560 6,540 4,370
Short-term investments - - -
Supplies inventory 987 654 980
Total current assets 120,849 88,400 81,854
Property and equipment 46,458 48,445 51,789
E&E Assets 65,000 65,000 25,000
Total Assets 232,307 201,845 158,643
Accounts payable 13,240 14,567 15,630
Total current liabilitites 13,240 14,567 15,630
Provisions for reclamation 5,608 7,040 7,540
Total Liabilities 18,848 21,607 23,170
Shareholders' Equity
Issued capital 308,696 314,288 352,339
Accumulated deficit (119,060) (161,020) (248,000)
Share-based payment reserve 23,823 26,971 31,135
Total Shareholders' Equity 213,459 180,238 135,473
Total Shareholders' Equity and liabilities 232,307 201,845 158,643

National Mining Competition: Academic Case / page 8
Statement of Cash Flow

(In thousands)
Statement of Earnings 2010 2011 2012
Operating Activities
Loss after tax (44,390) (41,960) (86,980)
Adjustments for:
Depreciation 3,245 3,340 3,145
Accretion on provision for reclamation 137 168 211
Share-based payments 4,345 5,433 5,444
Impairment of E&E asset - - 40,000
Changes in non-cash working capital:
AR (910) 2,020 2,170
AP 2,810 1,327 1,063
Inventory 243 333 (326)
Net cash used in Operating Activities (34,520) (29,339) (35,273)
Investing activities
Additions to property and equipment (5,403) (5,327) (6,489)
Purchase of short term investments - - -
Redemption of short term investments 70,560 - -
Acquisition of E&E Asset (65,000) - -
Net cash used in investing activities 157 (5,327) (6,489)
Financing Activities
Issuance of common shares on exercise of options 12,345 4,570 2,560
Common shares issued for cash 97,560 - 34,500
Net cash used in financing activities 109,905 4,570 37,060
Increase (decrease) in cash and cash equivalents 75,542 (30,096) (4,702)
Cash and cash equivalents, beginning of period 35,760 111,302 81,206
Cash and cash equivalents, end of period 111,302 81,206 76,504

National Mining Competition: Academic Case / page 9
Appendix 2 Stock Price Chart


$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
7-Jan-13 7-Mar-13 7-May-13 7-Jul-13 7-Sep-13
S
h
a
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P
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NorthRush Resources YTD Share Price

National Mining Competition: Academic Case / page 10
Appendix 3 Mineral Reserves
Mineral Reserves



Kivalliq Region - Baker Lake Area
Tonnes
Au Grade
(g/tonne) Au Ounces
Proven 98,954,000 1.78 5,662,972
Probable 47,547,000 1.63 2,491,735
Total P+P 146,501,000 1.73 8,154,707
Resource Category
Qikiqtaaluk Region - Iqaluit Region
Tonnes
Au Grade
(g/tonne) Au Ounces
Proven 25,694,000 8.94 7,385,167
Probable 7,652,000 7.68 1,889,414
Total P+P 33,346,000 8.65 9,274,581
Resource Category
Kitikmeot Region - Bathurst Inlet Area
Tonnes
Au Grade
(g/tonne)
Ag Grade
(g/tonne) Au Ounces Ag Ounces
Proven 63,849,000 1.12 26.2 2,299,128 53,783,177
Probable 46,457,000 1.34 31.8 2,001,460 47,497,346
Total P+P 110,306,000 1.21 28.56 4,300,589 101,280,523
Resource Category

National Mining Competition: Academic Case / page 11
Appendix 4 Claim Maps








National Mining Competition: Academic Case / page 12






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