TSX-V: TGX - True North Gems · additional 7% of TNGG for US$3M plus commitment to undertake and...

TSX-V: TGX

www.truenorthgems.com May 2016

TSX-V: TGX

www.truenorthgems.com

The information contained in this document is proprietary information of True North Gems Inc. (the Company). It is the property of the Company and shall not be used, disclosed to

others or reproduced without the express written consent of the Company. If consent is given for reproduction in whole or in part, this notice shall appear in any such reproduction.

This document contains forward-looking information or forward-looking statements within the meaning of certain securities laws, including provisions of the Securities Act (Ontario) and

the provisions for safe harbour under the United States Private Securities Litigation Reform Act of 1995 concerning anticipated developments and events which the Company has a

reasonable basis to believe may occur in the future. These forward-looking statements are based on projections, expectations and estimates as of the date of this document. Forward-

looking statements are provided for the purpose of providing information about management expectations and plans relating to the future. All of the forward-looking statements made

in this document are qualified by these cautionary statements and those made in other filings with the securities regulators of Canada.

Forward-looking statements include, but are not limited to, statements with respect to the future price of rubies and other gemstones, the estimation of mineral resources and reserves,

the realization of mineral resource estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of

new deposits, timing of completion of pre-feasibility studies, success of exploration and development activities, permitting time lines, currency fluctuations, requirements for additional

capital, government regulation of exploration operations, environmental risks, title disputes or claims, completion of acquisitions and their potential impact on the Company and its

operations, limitations on insurance coverage and the timing and possible outcome of pending litigation. In certain cases, forward-looking statements can be identified by the use of

words such as plans, expects or does not expect, is expected, budget, scheduled, estimates, forecasts, intends, anticipates or does not anticipate, or believes, or variations of such

words and phrases or statements that certain actions, events or results may, could, would, might or will be taken, occur or be achieved.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be

materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others: risks related to

the exploration and development of mineral properties; actual results of current exploration activities; current global economic conditions; conclusions of future economic evaluations;

changes in project parameters as plans continue to be refined; environmental risks; future prices of rubies and other gemstones; currency fluctuations; possible variations in ore

reserves, resources, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; risks

related to joint venture operations; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; and those factors discussed

in the section entitled Risk Factors in the annual information form as required by the regularity authorities.

Although the Company has attempted to identify important factors (which it believes are reasonable) that could cause actual actions, events or results to differ materially from those

described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance

that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers

should not place undue reliance on forward-looking statements. Such statements are based on management’s best judgment based on facts and assumptions that management

considers reasonable, which may prove to be incorrect, including but not limited to assumptions about: general business and economic conditions; interest rates and foreign exchange

rates; market competition; the availability of financing; changes to tax rates and benefits; the Company’s costs of exploration, the ability of the Company to attract and retain skilled

employees; and ongoing relations with Company employees and business partners. The Company makes no representation that reasonable business people in possession of the

same information would reach the same conclusions. Other than as specifically required by law, the Company undertakes no obligation to update any forward-looking statement to

reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future

events or results or otherwise.

CAUTIONARY STATEMENT

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CORPORATE STRUCTURE

Common shares 307,485,383

Warrants 980,656 – Avg strike price $0.09

Options18,750,000 – Avg strike price

$0.13

Fully Diluted 331,946,039

Share Price $0.15

52 Week High/Low $0.20/$0.06

Average Daily Volume ~ 114,000

Market Cap $49 million

Owned By Board/Management 9 million (2.9%)

Halman Aldubi Provident Pension Fund 36.9 million (12%)

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ABOUT US: MANAGEMENT TEAM

Nicholas Houghton, President & CEO - Accredited Gemologist with 30+ years of international experience in

the jewellery manufacturing and gemstone exploration industry. Member of Ethics Committee for the

International Coloured Gemstone Association.

Bent Olsvig Jensen, Managing Director Greenland - 15+ years experience practicing management and

negotiations with both public and private institutions in Greenland. Vast experience in cooperation with the

Greenlandic authorities at all levels, and essential knowledge and insight on operations management in

Greenland.

Hayley Henning, VP Sales and Market Development - Ms. Henning has twenty years of marketing and

corporate social responsibility (CSR) experience in the gemstone and jewellery industry. Her career highlights

include her role for the last several years as Executive Director of the Tanzanite Foundation, the marketing

division of TanzaniteOne Mining Ltd

Christopher Richards, CFO - Mr. Richards is Chartered Professional Accountant (CA) with 15+ years of

professional experience in financial and accounting management, with the past 10+ years in the mining

industry. Previously, he worked 7 years with KPMG, was Controller at NovaGold Resources Inc., and VP

Finance and Corporate Secretary at Altynalmas Gold Ltd. (now Kyzyl Gold Ltd.).

Andrew Fagan, Project Manager - Diamond and gemstone geological consultant with B.Sc. (Hons) and

Master of Science degrees in gemstone geology. Fellow of the Geological Society of London and Chartered

Geologist (C.Geol.).

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AAPPALUTTOQ RUBY PROJECT

Location: Aappaluttoq, Greenland (200m elevation), 150 km south of the capital of Nuuk, 20 km southeast of the community of Qeqertarsuatsiaat.

Mineralization: Chrome Rich Corundum (Ruby and Pink Sapphire)

Corundum Deposit Type: Hard Rock

Exceptionally high grade, simple mining methods

Predictability of grade and geological expansion

Only 43-101 compliant gemstone deposit in the world

Extraction Methods: Crushing, Optical Sorting and DMS

Corundum is hard – host minerals are soft

Upgrading methods include hand cob, optical sorting, attrition milling and secondary cleaning

Finished Product: Consistency in quality, colour, calibration and traceability

Sales of rough and polished goods

A secured long term source of ruby and pink sapphire that allows the market to grow

Aappaluttoq Ruby Project

Nuuk

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LNS-TNG JOINT VENTURE

Aug 2013 – LNS-TNG entered into

an earn-in option agreement for

20% of TNGG

Nov 2014 – LNS purchased

additional 7% of TNGG for US$3M

plus commitment to undertake and

additional US$5M in construction

costs

Aug 2015 – Greenland Ventures

purchased 7% of TNGG for US$4M.

TNG has right to buy back up to

50%

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AAPPALUTTOQ MINE – 9 YEAR PIT DESIGN

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CORUNDUM GRADE – PRIMARY PIT

Category Volume Tonnage Average Grade Average GradeContained

Corundum

Contained

Corundum

m3 Tonnes Grams/Tonne Carats/Tonne Grams million Carats million

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

Grade (g/T)

0.01-1.0

1.0 - 40

40 - 100

100 - 250

250 - 500

500 - 1000

1000 +

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CONSTRUCTION AND PLANT EQUIPMENT INSTALLATION

• The workshop is complete, fully equipped and in-use. The shell of

the processing plant is constructed with work on the internal offices

and power distribution room to be completed.

• Installation of the processing plant structural steel and processing

equipment is underway, with one of the three main towers

installed. This structure supports the ore feed conveyor, the

primary ore-hopper, and the scrubber unit.

• The primary crusher pad area has been readied and the exterior

conveyor belt has been installed.

• All processing plant equipment is on site (including all long-lead

items) and are in the process of being installed.

• Formal hand-over has begun on completed infrastructure including

Helipad, Mine Camp, Workshop, Power Generation Facilities, fuel

tanks and the explosive storage depot.

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PIT OPERATIONS

• Pit operations began in December 2015 focussing on

stripping overburden from the top of the exposed ore. To

date, and area of ~2,450 meters squared was stripped with

overburden thickness varying from 0 to ~5 meters.

• To protect the soft phlogopite-corundum ore from blasting

shockwaves, a ‘blast-screen’ was designed and drilled along

the 120 meters strike length of exposed ore body. A total of

675 top-hammer drillholes were bored parallel to the edge of

the ore.

• Waste rock-blasting and removal commenced in January

2016 and is focused on clearing the first mine bench area

around the ore body to create sufficient working space for

heavy equipment.

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COMPLETED MINE SITE AND INFRASTRUCTURE

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MINING SCHEDULE

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9

Extr

acte

d O

re (

To

nn

es

)

Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Total

Ore tonnes 2,849 12,745 16,560 22,792 22,820 23,564 26,142 31,118 31,178 189,768

Waste tonnes 17,485 167,729 485,012 449,311 571,179 484,642 407,319 249,920 136,266 2,968,862

Corundum

Head grade 1,396 438 274 310 196 186 244 226 386 292

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GEMSTONE PRODUCT

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EXPOSED ORE JAN 2016

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AAPPALUTTOQ ECONOMIC HIGHLIGHTS

Revenue US$

$573mPost Tax IRR%

122%

Net Profit After Tax US$

$171m

Average Ruby and Pink

Sapphire Price US$

$7 per carat

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PFS FINANCIAL PROJECTIONS

Aappaluttoq Ruby Project Production results

Tonne processed190 Tonnes (Thousands)

Waste rock mined 2,969 Tonnes (Thousands)

Stripping ratio 16

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 in US$/g1 US$33/gram

Estimated revenue US$573 Millions

Economic scenario results Project Economics

All in cash cost per equivalent rough ct. recovered2 US$3/CT

Total Operating costs US$94M

Total Project Capital cost (Initial and sustaining)3 US$25M

Total Sustaining Capital cost US$5M

Total Pre-tax cash flow from operations US$452M

Total Post tax cash flow US$282M

Pre-tax NPV at 8% real discount rate US$275M

Post-tax NPV at 8% real discount rate US$171M

IRR 122%

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CASH FLOW PROJECTION

-$20,000,000

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

$140,000,000

$160,000,000

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9

Gross revenue from sales US $

Total operating costs in US$

Pre-tax project cash flow

Operating Year 1 2 3 4 5 6 7 8 9

Gross revenue from sales US $ $12M $36.3M $36.8M $95.6M $62.2M $52.4M $67.5M $76.2M $134M

Total operating costs in US$ $5M $10.8M $13.7M $13M $13.5M $13.2M $13.2M $13.1M $13M

Pre-tax project cash flow -$4M $29.5M $19.8M $79.7M $48.6M $39.3M $54.3M $63.1M $120M

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RUBY INDUSTRY

Ruby & diamond ring, by Chaumet

featuring a ruby weighing 32.08 carats

Price realized: $6,600,000

Ruby & diamond Van Cleef & Arpels ring


Ruby & diamond Camelia flower brooch by JAR


Ruby and Diamond Ring, featuring the Graff ruby

weighing 8.62 carats

Price Realized : $8,600,000

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RECORD BREAKING RUBY PRICES

April 12, 2005 – Christie’s New York sale, an 8.01 carat oval-cut Burmese

ruby sold for $2,200,000, setting a world auction record price for a ruby at

$274,656 per carat

February 15, 2006 – Lawrence Graf paid a record $425,000 per carat for an

8.62ct Burmese ruby at Christie’s St. Moritz auction

2007 – 2010 – due to depressed market conditions and ensuing lack of

material in 2008, there were no major ruby sales, however by 2010 prices

began to climb to record levels

December 13, 2011 – Christie’s New York auction, in which an 8.24ct ruby

and diamond Van Cleef & Arpels ring belonging to Liz Taylor sold for

$4,226,500, fetching a record price of $512,925 per carat

May 14, 2012 – Christie’s International in Geneva, a new record auction was

set with the sale of a ruby and diamond ring from the collection of Brazilian-

born philanthropist Lily Safra for $6,600,000. Also sold in the auction was a

ruby and diamond Camelia flower brooch by JAR for $4,270,000

2012 – Ruby prices continue to climb with a $6.04 Burmese ruby by Etcetera

Limited selling for $551,000 per carat, or $3.3 million

In November 2014, the Graff ruby returned to the Christie’s Geneva jewellery

auction, this time selling for $997,700 USD per carat, or $8.6 million. The sale

of the Graff ruby has set a record not just for a ruby, but for a ruby price per

carat.

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

2005200620072008200920102011201220132014

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SUPPLY AND DEMAND

Supply

• Historical source of gem quality rubies is Burma (Mynamar)

• Little production from this region resulting in severe supply shortage

New Sources

• Most notable is Montepuez in Mozambique (Gemfields)

• Aappaluttoq in Greenland (True North Gems)

- reliable, long term supply of natural (non-heated) pink sapphires and rubies

Demand

• China, India & the USA are leading consumers of gemstones

• Indicators reflect the gemstone trend will continue to grow

• Opportunity to support industry growth corporately by:

- increased industry professionalism & transparency

- social & environmental responsibility

- consumer education through brand enhancement (industry & individual companies)

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INDUSTRY SUMMARY

Global ruby market size is

approximately US$2.1 billion*

Global pink sapphire market is

approximately US$58.8 million*

Global jewellery sales are poised to

grow at 4.6% year-on-year to touch

US$230 billion in 2015**

India and China together will emerge

as a market equivalent to US market

•*Source: MVI Marketing

•**data is still being correlated

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SO, WHY TRUENORTH GEMS?

The Company has developed from a leading gemstone explorer into an imminent

gemstone producer

We are opening doors to the entire jewelleryindustry due to our extensive experience in

marketing and gemstone sales

Securing long-term buyer contracts with recognized reputable industry leaders and

jewellery manufacturers

Ability to supply the industry with goods of a consistent quality

Provide continuity of supply from a hard-rock host deposit and minable resource in a geopolitically,

stable country

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IT’S BEEN DONE BEFORE – THE DEBEERS EFFECT

• Historically coloured gemstones were always treasured over diamonds. Their rarity and beauty drove

the demand until the discovery of a hard rock diamond source by DeBeers. They recognised that

consistency and control of source could fuel the exponential expansion of the fledgling diamond

industry

• Since then the DeBeers empire and marketing effect has exponentially driven the entire diamond

market to its current annual value of US$81 billion per annum by the use of pointed marketing and

brand awareness “A Diamond is Forever” (DeBeers, 1947)

• The coloured gemstone industry is currently valued at US$14 billion per annum, and sits in a

comparative position prior to the DeBeers effect.

• Gemfields have successfully applied the DeBeers marketing methodology towards coloured

gemstones

• Colour is now back in demand and through consistency of both supply and source. True North Gems

can drive it along the same exponential growth path.

• Through guaranteed supply and targeted branding True North Gems will achieve market success for

our Greenlandic ruby and sapphires.

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MOVING FORWARD

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KEY OBJECTIVES FOR 2016

Commissioning of the plant

Initiation of Marketing

Commencement of Sales

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KEYS TO UNLOCKING POTENTIAL

Commencement of production

Sale of inventory produced and

on-hand

Extensive marketing of pink

sapphires to raise the awareness

and availability of the gemstone

Working jointly with worldwide gem

industry partners to increase

demand for a new source of

certified ruby and pink sapphires

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UNREALIZED GROWTH POTENTIAL

Kigutilik Expansion Target

Siggartartulik Expansion Target

AappaluttoqMine Site

Recognized Occurrences:

- Aappaluttoq Mine Site

- Siggartartulik & Kigutilik Expansion Targets

Expansion of production through

familiarity of the deposit will be a natural

lead to increase of profitability

Secondary geological expansion

deposits have already been recognized

by the Company and exploration has

been initiated

Development of future targets will follow

as market acceptance confirms the need

to supply more material and will be

financed through the future positive

cash-flow

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TSX-V: TGX - True North Gems · additional 7% of TNGG for US$3M plus commitment to undertake and...

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