True North Gems Inc. (TSX-V:TGX) is pleased to announce the results of the updated pre-feasibility study on the Aappaluttoq Ruby and Pink Sapphire Project in Southwest Greenland. True North contracted Tetra Tech of Vancouver as independent engineers to review the project and complete the update.
 

Key financial and project highlights of the Aappaluttoq PFS are as follows:

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                                            Production                      

  Aappaluttoq Ruby Project                     results                Units 

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  Tonne processed                                  190    Tonnes (Thousands)

  Waste rock mined                               2,969    Tonnes (Thousands)

  Stripping ratio                                   16                  N/A 

  Mine operational years (starting                                          

   2015)                                             9                Years 

  Total corundum recovered from mine                                        

   site                                           52.7       Grams Millions 

  Rough gemstones recovered from                                            

   operations                                     17.5       Grams Millions 

  Average Ruby and Pink Sapphire                                            

   Price: US$ pct.(1)                         $      7   US$ per ct. (rough)

  Estimated revenue                           $    573          US$ Million 

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  Economic scenario results                    Project                      

                                          Economics(5)                      

  All in cash cost per equivalent                                           

   carat recovered(2)                         $      3   US$ per ct. (rough)

  Total Operating costs                       $     94          US$ Million 

  Total Project Capital cost (Initial                                       

   and sustaining)(3,4)                       $     25          US$ Million 

  Total Sustaining Capital cost               $      5          US$ Million 

  Total Pre-tax cash flow from                                              

   operations                                 $    452          US$ Million 

  Total Post tax cash flow                    $    282          US$ Million 

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  Pre-tax NPV at 8% real discount                                           

   rate                                       $    275          US$ Million 

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  Post-tax NPV at 8% real discount                                          

   rate                                       $    171          US$ Million 

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  Post-tax IRR %                                   122%                     

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  Post tax payback period                          1.8                Years 

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Notes:                                                                      

1. The average price utilizes gem and near-gem material only; sale of       

commercial grade corundum has not been included in this PFS. Price forecasts

are inclusive of 2.5% annual escalation from the average 2015 price over the

life of the mine, this escalation is based on a conservative estimate of the

long term supply-demand balance in the coloured gemstone market.            

2. All- in-cash costs include the capital, operating, taxes and royalties   

projected on a per rough carat produced basis.                              

3. This figure includes the investment that LNSG have made of US$14 million 

in True North Gems Greenland (TNGG) through an agreement whereby LNSG earns 

27% shareholding of TNGG through investment and construction of project     

infrastructure at Aappaluttoq. Tetra Tech has estimated that the            

contribution by LNSG reduces upfront capital by an equivalent of US$17      

million, with the remaining US$8 million in capital contributed by TNG.     

4. Estimated capital cost includes 4% contingency, varying between 0% for   

quoted items currently in construction and 30% for equipment for which bids 

have not yet been received.                                                 

5. US$ to CAD$ used through the PFS is US$1 to CAD$1.24.

Key financial and project highlights of the Aappaluttoq PFS for True North Gems are as follows:

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  Economic scenario results                        TNG                Units 

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  All in cash cost per equivalent carat                                     

   recovered(1)                                $     3   US$ per ct. (rough)

  Total Operating costs(2)                     $   109          US$ Million 

  Total Capital cost                           $     8          US$ Million 

  Total Sustaining Capital cost                $     5          US$ Million 

  Total Pre-tax cash flow from operations      $   454          US$ Million 

  Post tax cash flow                           $   287          US$ Million 

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  Pre-tax NPV at 8% real discount rate         $   281          US$ Million 

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  Post-tax NPV at 8% real discount rate        $   179          US$ Million 

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    TNG Post-tax NPV at 8% real discount                                    

     rate(3)                                   $   125          US$ Million 

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  Post-tax TNG IRR %                               485%                     

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  Post tax payback period                          1.1                Years 

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Notes:                                                                      

1. All- in-cash costs include the capital, operating, taxes and royalties   

projected on a per rough carat produced basis.                              

2. Inclusive of lease payments.                                             

3. NPV solely for TNG interest in the project

“The Company is extremely pleased with the completion of this pre-feasibility study and the strong economic findings. It confirms our long-held confidence in the Aappaluttoq Project and its potential to be developed successfully into long term sustainable profitable operation delivering lasting benefits to the people of Greenland our shareholders and the international gemstone markets.” stated Nicholas Houghton, President and CEO of True North Gems.
 

Resources and Reserves:
 

The current resource for the Aappaluttoq Deposit was issued on 1st June, 2011. No further in-ground geological development work has occurred since then, thus the resource is still current and actively utilized within the updated pre-feasibility study. The tables below summarize the Mineral Resources and probable open-pit Mineral Reserves for the Aappaluttoq Project. The Mineral Reserves account for the anticipated mining recovery and dilution and a lower cut-off size of 1.7mm, which is utilized throughout the resource and plant design. Mineral Resources are reported inclusive of Mineral Reserves.
 

Aappaluttoq Mineral Resources

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                                               Average  Contained  Contained

                     Tonnage      Average        Grade   Corundum   Corundum

  Category    Volume     (1)  Grade (2,3)      (2,3,4)      (2,3)    (2,3,4)

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                                                            Grams     Carats

                  m3  Tonnes  Grams/Tonne Carats/Tonne    million    million

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  Indicated   59,110 189,150       313.33     1,566.65      59.27     296.33

  Inferred    24,110  77,160       283.46     1,417.28      21.87     109.35

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Notes:                                                                      

  (1) Densities are derived from specific gravity measurements of host      

   lithologies and estimated for host zone based on specific gravity of     

   corundum and average grade                                               

  (2) Based on a Total Clean Corundum grades greater than 1.7 mm size       

   fraction from mineralogical lab analysis                                 

  (3) Top cut grade of 7,325 grams per tonne (97.5 percentile), and a lower 

   cut-off grade of 1 gram per tonne                                        

  (4) One gram equals five carats

Aappaluttoq Probable Open Pit Mineral Reserves

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                                                                   Contained

                                                              corundum above

  Category                           Tonnage  Average Grade            1.7mm

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                             Thousand tonnes    Grams/tonne    Grams Million

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  Total probable mineral                                                    

   reserves for mining(1)                167            339               57

  Mill feed after dilution                                                  

   and mining losses(2)                  190            292               55

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Notes:                                                                      

    (1) All corundum containing indicated resources within the open pit as  

        designed, intended for mill feed                                    

    (2) Resulting mill feed including waste dilution due to mining method of

        an estimated 19% and mining loss of 4.5%

Capital and Operating Cost:
 

The primary capital development cost for the project including initial and sustaining has been estimated at US$25 million which includes construction of the project port, roads, helipads, mine camp, security, processing facility and workshop. This represents a significant reduction of approximately US$15 million over the 2011 Prefeasibility study that has been accomplished by utilizing a Greenlandic partner experienced in arctic construction, as well as designing a corundum recovery plant with a lower capital requirement, and contributing EPCM within the Company’s experienced Nuuk operations team. As part of the LNS-Greenland joint venture agreement the majority of the capital costs will be assumed by LNS-Greenland in exchange for a final earn of 27% ownership of True North Gems Greenland A/S the subsidiary of True North Gem Inc. The Company is expected to contribute US$8 million of the total capital expenditure; these expenses include the processing plant equipment, Nuuk HF secondary cleaning facility, corporate in-country headquarters and the gem sorting and grading facility. The operating expenditure includes negotiated fixed lease payments to LNS-Greenland for certain site buildings and other estimated costs using quotes provided by LNS-Greenland and verified by TetraTech.
 

The LNS joint venture will provide all mining and service equipment for the mining project this equipment includes; three haul trucks, three excavators, three front end loaders and various service and small vehicles that will be leased over the current life of mine.
 

Mining and Corundum Recovery:
 

The study contemplates the development of an open pit mine to extract the probable Mineral Resources using conventional mining equipment. The mined ore will be transported to an adjacent process facility where it will be concentrated using an iterative crushing, dense media separation and optical sorting circuit to extract a rough corundum concentrate. This initial rough concentrates will be shipped to a secondary processing facility for the removal of any remaining rock matrix prior to ruby and pink sapphire grading. A lower cut-off size in the design has been established at 1.7 mm, which is nominally larger than the minimum size of gemstone rough supplied for commercial polishing.
 

Ruby and Pink Sapphire Rough Values:
 

The ruby and pink sapphire values were recently completed using the average offer to purchase submitted by independent international buyers of coloured gemstones after viewing the various categories of rough material. In addition, GemWorld completed their own independent evaluation of polished ruby and pink sapphire pricing across all categories as a window on the polished market. The Company is expected to primarily sell rough but a certain component of polished will also be sold and is incorporated into the financial analysis. No value has been attributed for the recovery of any opaque non-gem material. All valuation information was reviewed by Tetra Tech to ensure it was properly incorporated into the financial analysis.
 

Other opportunities include:

--  Upgrade of inferred resources to indicated: The resource estimate

    identifies 77,200 tonnes of inferred resource with a grade of 283 grams

    per tonne of total clean corundum. In accordance with NI 43-101

    standards 66,000 tonnes of the inferred resource falls within the

    designed pit shell but is not included as ore in the study. 

--  Increasing mine life and/or throughput: The deposit remains open along

    strike in both directions and to depth, indicating potential for

    increased throughput and/or a longer life operation. The processing

    plant is designed for additional capacity. 

--  Development of nearby targets-for-further-exploration which host gem

    corundum at surface and lie within 10km of the Aappaluttoq site -

    including Siggartartulik and Kigutilik both of which are within the

    Companys licence area.

The Company will issue the final technical report quoted in this release for the Aappaluttoq ruby project within 45 days as required by NI 43-101, this will update the previous technical report filed on 1 June, 2011. TetraTech relied on information provided by several other contributors including:

--  Novus Engineering of Vancouver: Process plant engineering and

    metallurgical testing; 

--  GemWorld International of Chicago: Ruby and Sapphire market analysis; 

--  Independent and confidential valuations of rough ruby and pink sapphire;

--  LNS Group of Norway: Construction costs, Greenland logistics and

    Operating estimates; 

--  Ramboll of Denmark: environmental baseline studies, monitoring and

    Environmental Impact Assessment; 

--  Grontmij of Denmark: Socioeconomic impact assessment; 

--  InuPlan A/S of Nuuk: Mine environmental monitoring program and extended

    EIA baseline study;

In accordance with NI 43-101, Mark Horan, P.Eng. and Lara Reggin, P.Geo. of TetraTech-EBA are the independent Qualified Persons responsible for the technical information in this news release. Mr. Horan and Ms. Reggin have reviewed this release and approved its contents.
 

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.